Autos top Asian Market losses following Trump’s New Tariff Barrage

Automakers were pounded Thursday, and stock markets sank on both sides of the Atlantic, as US President Donald Trump slapped punitive tariffs on imported automobiles and parts, as he pursues hardball trade tactics that many worry may ignite a recession. On Wall Street, the Dow, the tech-heavy Nasdaq, and the broader-based S&P 500 were all down roughly half a percent more than two hours into trade, with General Motors down over seven percent and Ford falling just shy of three percent.

Toyota, the world’s best-selling automaker, sank 2% in Tokyo, while Honda fell 2.5 percent, Nissan fell 1.7 percent, and Mazda fell 6%. Seoul-listed Hyundai gave up more than 4%. Volkswagen declined 1.3 percent, Porsche 2.6 percent, Mercedes 2.7 percent, and BMW 2.5 percent, all contributing to a 0.7 percent drop in the Frankfurt DAX index. Stellantis, the producer of Jeeps, dropped more than four percent.

Tata Motors, India’s exporter of Jaguars and Land Rovers to the United States, dropped more than 5% in Mumbai, prompting experts to speculate on where markets may be going. “The trade war has gotten worse, and naturally, German carmakers are leading the declines or are one of the leading decliners today,” said StoneX Group analyst Fawad Razaqzada. “While investors see a fair chance of successful negotiations between the European Union and the United States in the coming weeks, many prefer to wait for these talks to occur rather than speculate in advance,” said Jochen Stanzl, chief market analyst at CMC Markets. “In the end, these actions could follow typical patterns: threats issued first, followed by negotiations, leading to compromises that the US president can triumphantly present,” Stanzl added.

“Contemporary glee over the notion that Trump wouldn’t slap sector specific tariffs… (in early April) have been utterly shattered by the fact that the president has instead decided to begin announcing such initiatives ahead of that date,” said to Joshua Mahony, an analyst at Scope Markets. “We’re going to impose a 25% tariff on all cars that aren’t made in the United States,” Trump declared as he signed an order in the Oval Office.

The change takes effect on April 3 at 12:01 a.m. Eastern time (0401 GMT) and applies to foreign-made vehicles and light trucks imported into the United States. Key automotive components will also be impacted this month. “The move has raised concerns about the impact on global growth and corporate profitability, particularly for carmakers in Mexico, Japan, South Korea, and Germany, which are key suppliers to the US market,” said Daniela Sabin Hathorn, senior market analyst at Capital.com.