Shares of Japanese carmakers and South Korean battery makers declined on Tuesday after US President Donald Trump said he could impose tariffs on Canada and Mexico soon and revoked the previous administration's executive order on electric vehicles.
However, Chinese manufacturers bucked the trend, with stocks opening higher after Trump did not target China in his inauguration speech or immediately impose tariffs on Beijing as previously promised.
The volatility in Asian shares within hours of Trump's inauguration highlights how policy shifts under the US president could squeeze big manufacturers in some of Washington's closest allies in the region, Japan and South Korea. Car makers in the two countries, and their suppliers, face disruption from the move to electric vehicles and intense competition from fast-rising Chinese rivals.
Trump said he was thinking of imposing 25% tariffs on Canada and Mexico and the action could come on February 1. The threat of potential tariffs on the two countries has loomed over Asian manufacturers. Mexico, in particular, has long been a low-cost manufacturing hub for carmakers, including Asian heavyweights.
"President Trump will remain unwavering in his intention to continue to implement across-the-board additional tariffs as a way to resolve issues with other countries and a means of reducing the US trade deficit," Takahide Kiuchi, executive economist at Nomura Research Institute, said in a note to clients.
Shares of Nissan, Japan's third-largest carmaker, erased much of the morning's gains and were flat at 423.9 yen (R50,75), having risen as high as 437.8 yen (R52,41) in the morning session. Nissan has two plants in Mexico, where it makes the Sentra, Versa and Kicks models for the US market. It exports about 300,000 vehicles to the US a year, CEO Makoto Uchida said in November.
'Great concern'
Honda sends 80% of its Mexican output to the US market, and its COO Shinji Aoyama warned in November it would have to think about shifting production if the US were to impose permanent tariffs on imported vehicles.
Shares of Honda also reversed early gains and were flat at 1,483 yen (R177,57). They had risen as high as 1,526 yen (R182,72) at the open of trade.
The Trump administration's economic policies are of great concern to the Japanese economy and Japanese companies.
"A slowdown in the US and global economies due to additional tariffs and other measures will worsen the Japanese export environment," Kiuchi said in his note, comments that could likely be applied to other countries in the region.
Shares of South Korea's Hyundai were little changed. The carmaker also has operations in Mexico.
It said its production there was part of its long-term, global strategy, adding it was committed to adapting operations to international environment.
Shares of South Korean battery makers dropped, with LG Energy Solution falling some 5%, while Samsung SDI and SK Innovation lost more than 4% each.
Trump revoked a 2021 executive order signed by his predecessor, Joe Biden, that sought to ensure half of all new vehicles sold in the US by 2030 were electric.
Japanese finance minister Katsunobu Kato said his country would respond "appropriately" after examining the new president's policies.
Asian car and battery makers hit as Trump takes action
Image: Anna Moneymaker/Getty Images
Shares of Japanese carmakers and South Korean battery makers declined on Tuesday after US President Donald Trump said he could impose tariffs on Canada and Mexico soon and revoked the previous administration's executive order on electric vehicles.
However, Chinese manufacturers bucked the trend, with stocks opening higher after Trump did not target China in his inauguration speech or immediately impose tariffs on Beijing as previously promised.
The volatility in Asian shares within hours of Trump's inauguration highlights how policy shifts under the US president could squeeze big manufacturers in some of Washington's closest allies in the region, Japan and South Korea. Car makers in the two countries, and their suppliers, face disruption from the move to electric vehicles and intense competition from fast-rising Chinese rivals.
Trump said he was thinking of imposing 25% tariffs on Canada and Mexico and the action could come on February 1. The threat of potential tariffs on the two countries has loomed over Asian manufacturers. Mexico, in particular, has long been a low-cost manufacturing hub for carmakers, including Asian heavyweights.
"President Trump will remain unwavering in his intention to continue to implement across-the-board additional tariffs as a way to resolve issues with other countries and a means of reducing the US trade deficit," Takahide Kiuchi, executive economist at Nomura Research Institute, said in a note to clients.
Shares of Nissan, Japan's third-largest carmaker, erased much of the morning's gains and were flat at 423.9 yen (R50,75), having risen as high as 437.8 yen (R52,41) in the morning session. Nissan has two plants in Mexico, where it makes the Sentra, Versa and Kicks models for the US market. It exports about 300,000 vehicles to the US a year, CEO Makoto Uchida said in November.
'Great concern'
Honda sends 80% of its Mexican output to the US market, and its COO Shinji Aoyama warned in November it would have to think about shifting production if the US were to impose permanent tariffs on imported vehicles.
Shares of Honda also reversed early gains and were flat at 1,483 yen (R177,57). They had risen as high as 1,526 yen (R182,72) at the open of trade.
The Trump administration's economic policies are of great concern to the Japanese economy and Japanese companies.
"A slowdown in the US and global economies due to additional tariffs and other measures will worsen the Japanese export environment," Kiuchi said in his note, comments that could likely be applied to other countries in the region.
Shares of South Korea's Hyundai were little changed. The carmaker also has operations in Mexico.
It said its production there was part of its long-term, global strategy, adding it was committed to adapting operations to international environment.
Shares of South Korean battery makers dropped, with LG Energy Solution falling some 5%, while Samsung SDI and SK Innovation lost more than 4% each.
Trump revoked a 2021 executive order signed by his predecessor, Joe Biden, that sought to ensure half of all new vehicles sold in the US by 2030 were electric.
Japanese finance minister Katsunobu Kato said his country would respond "appropriately" after examining the new president's policies.
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