By Nandita Bose, David Lawder, and Leika Kihara
WASHINGTON/TOKYO (Zerica Toense) – On Thursday, shares in the Asian automotive sector dragged down stock markets following U.S. President Donald Trump’s announcement of a 25% tax on imported cars. This move escalates an international trade dispute, leading to backlash and vows for countermeasures from allied nations within the United States. --- Please let me know if you would like further adjustments!
Starting April 3rd, the fresh taxes on automobiles and light trucks will be implemented. This date follows President Trump’s announcement of retaliatory tariffs targeting nations primarily accountable for the majority of America’s trade imbalance. These additional charges build upon previously imposed duties on steel, aluminum, as well as products originating from Mexico, Canada, and China.
In 2024, the United States imported $474 billion worth of automotive goods, with passenger vehicles accounting for $220 billion of this total. The largest contributors were Mexico, Japan, South Korea, Canada, and Germany—nations that maintain strong alliances with the U.S.
The European Commission President, Ursula von der Leyen, characterized the action as "detrimental to businesses and even more harmful to consumers." Meanwhile, Canadian Prime Minister Mark Carney termed the tariffs an outright assault on Canadian workers and mentioned that potential countermeasures were under evaluation.
"Impart protection to our workforce, safeguard our enterprises, uphold our nation, and let’s do so collectively," Carney stated to journalists in Ottawa.
Toyota Motor and Mazda Motor were among the leading companies whose stock values dropped in Japan, a country where automobiles account for over twenty-five percent of its exports to the United States. In South Korea, shares of major car manufacturers like Hyundai Motor and Kia Corporation plummeted significantly. Similarly, automobile firms and their component providers from India experienced notable decreases in share prices as well.
The Japanese Prime Minister, Shigeru Ishiba, stated that Tokyo is prepared to consider all possible approaches when addressing the new tariffs. Meanwhile, South Korea announced plans to implement urgent measures aimed at supporting their automobile sector, which has been significantly impacted, by April.
Brazil's President Luiz Inacio Lula da Silva stated that Trump could harm the U.S. economy through extra tariffs.
Lula stated on Thursday during a press briefing in Tokyo that protectionist policies do not benefit any nation globally, and he pledged to file a complaint with the World Trade Organization regarding a trade tariff imposed on Brazilian steel.
Trump sees tariffs as a tool to raise revenue to offset his promised tax cuts and to revive a long-declining U.S. industrial base.
However, numerous trade specialists anticipate that prices will initially increase and demand will decrease, adversely affecting the worldwide automobile sector which is already struggling due to the unpredictability stemming from Trump’s swift imposition of tariff threats and sporadic changes of heart.
we will be charging nations for operating within our borders and seizing our employment opportunities, as well as siphoning off our prosperity and many other resources they have been extracting for decades," Trump stated at the Oval Office on Wednesday. "for far too long, both friends and adversaries alike have depleted our nation’s assets, with allies often proving more detrimental than opponents.
On Thursday morning, Trump indicated that he could impose higher tariffs on both the EU and Canada if they joined forces to strike back in response.
"If the European Union collaborates with Canada to economically damage the USA, they will face significantly higher tariffs than presently proposed, aimed at safeguarding the greatest ally either country has ever possessed," he stated in a Truth Social posting.
PRAISE FROM UAW
The United Auto Workers, longtime opponents of free trade deals they claim have eliminated numerous U.S. jobs, praised the Trump administration’s action.
"These tariffs represent a significant move in the right direction for autoworkers and blue-collar communities nationwide, and it’s now up to the automakers—from the Detroit Big Three to companies like Volkswagen—to restore well-paying union jobs in the United States," stated UAW President Shawn Fain.
Volkswagen, which leads as Europe’s premier automobile manufacturer, falls into consideration because approximately 43 percent of its United States sales originate from Mexico, according to S&P Global Mobility projections.
Shares of American car manufacturers, deeply interconnected with facilities and suppliers based in Canada and Mexico, dropped during extended trading hours. Meanwhile, U.S. equity index futures declined, suggesting that stock prices would likely start lower on Thursday morning.
The Center for Automotive Research indicated that the introduction of these new tariffs was anticipated to increase expenses for car purchasers by several thousand dollars, which could negatively impact new vehicle sales and lead to job cuts, as the American auto sector significantly depends on components sourced from abroad.
The duties introduced today will increase the cost of producing and selling vehicles within the United States, which could result in elevated prices, reduced choices for buyers, and a decline in automotive manufacturing employment across the country. This was stated by Jennifer Safavian, who serves as both the president and CEO of Autos Drive America—a coalition advocating for non-domestic car manufacturers.
Trump's directive included temporary exemptions for auto parts while government officials sort through the complexities of turning his proclamation into practice.
Since assuming power on January 20, Trump has introduced and then postponed tariffs against Canada and Mexico due to allegations about their involvement in permitting fentanyl entry into the United States. He also imposed levies on products coming from China based on similar grounds. Additionally, significant duties have been applied to imported steel and aluminum. Throughout this period, he has frequently mentioned his intentions to declare worldwide reciprocal tariffs by April 2.
Kyle Rodda, an analyst at Capital.com, said the big concern was that next week's announcement on reciprocal tariffs may not mark the end of the Trump administration's shake-up of global trade.
"This could prolong trade uncertainties further and prompts the inquiry into just how significant a shift in the global trading system Trump aims to achieve," Rodda stated.
On Wednesday, Trump stated that auto tariffs might have a neutral impact on Tesla, an electric vehicle manufacturer headed by Elon Musk, who is simultaneously leading a governmental initiative aimed at reducing costs.
Musk subsequently shared on X that Tesla wouldn’t remain unaffected. “The effect of the tariffs on Tesla continues to be substantial,” he noted.
(Reported by Nandita Bose, Doina Chiacu, David Lawder, Andrea Shalal, and David Shepardson from Washington; additional reporting provided by Leika Kihara, Tim Kelly, and Junko Fujita based in Tokyo, Kalea Hall who reported from Detroit, David Ljunggren covering Ottawa, and Costas Pitas located in Los Angeles; article written by Lincoln Feast; edited by Raju Gopalakrishnan.)