Asia automakers’ shares slump on US’ 25% tariffs on car imports

SINGAPORE (ICIS)–Shares of automotive companies in Asia slumped on Thursday after US President Donald Trump signed an executive order imposing 25% tariffs on all foreign-made cars from 2 April.

At 2:30 GMT, Japanese carmakers Honda Motor was down by 2.75%, Nissan Motor declined by 2.56%, and Toyota Motor fell by 3.24% in Tokyo.

South Korean Hyundai Motor was down by 3.24%, while Kia declined by 3.25% in Seoul.

Being major car exporters to the US, Japan and South Korea are expected to take heavy hits from US tariffs.

Chinese electric vehicle (EV) companies, however, appeared unaffected, BYD – China’s biggest EV producer – gained 0.85% on the Hong Kong Stock Exchange.

There would be no exceptions on the tariffs, while US-Mexico-Canada Agreement (USMCA)-compliant automobile parts will remain tariff free, according to Japan-based MUFG Global Markets Research.

Meanwhile, Trump considers Hyundai’s recently announced plan to invest $21 billion in the US as a win for his tariff policy.

Apart from reducing the US trade deficit with other nations, Trump’s tariff policy also aims to attract more investments into the US.

The automotive sector is a major downstream sector for petrochemicals, which account for a third of raw material costs of an average vehicle.

Automotives drive demand for chemicals such as polypropylene (PP), along with nylon, polystyrene (PS), and styrene butadiene rubber (SBR).

The US Federal Reserve maintained its short-term interest rates in the 4.25-4.50% range last week, as tariff uncertainty stoked fears of rising inflation.

Uncertainty over tariffs could dampen market sentiment more than the tariffs themselves, Minneapolis Federal Reserve Bank president Neel Kashkari said.

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Thumbnail image: Japan car exports – July 2014 (Everett Kennedy Brown/EPA/Shutterstock)