Asia’s automakers drive market decline amid Trump’s tariff impact
Shares of Japanese and South Korean car manufacturers and their suppliers led declines in Asia on Monday, following US President Donald Trump’s announcement of sweeping tariffs on Mexico, Canada, and China.
The tariffs, while anticipated, sent shockwaves through some of the world’s largest manufacturers. Investors are now concerned about the potential for weakened demand from the US, the world’s largest economy, and the risk of a broader downturn in global growth.
Automakers were particularly affected, with many Japanese and South Korean companies having significant operations in Mexico and relying on exports to the US. Toyota, the world’s top automaker, and its smaller rival Nissan both saw their stocks drop more than 5%, while Honda tumbled over 7%.
Nissan operates two plants in Mexico where it produces models such as the Sentra, Versa, and Kicks for the US market, exporting approximately 300,000 vehicles annually, according to CEO Makoto Uchida. Honda, which sends 80% of its Mexican output to the US, indicated that it may need to consider shifting production if permanent tariffs on imported vehicles are imposed.
South Korea’s Kia Motors, which also has a factory in Mexico, fell nearly 7%. Additionally, South Korean electric vehicle battery manufacturers and suppliers, which had plans to establish factories in Canada to supply major companies like GM and Ford, experienced significant declines. POSCO Future M and EcoPro BM plunged 9.1% and 8.7%, respectively.
Trump’s tariffs include a 25% duty on most imports from Mexico and Canada, and a 10% tariff on goods from China. While mainland China’s markets are closed for the Lunar New Year holiday, Chinese stocks listed in Hong Kong fell on Monday, reflecting concerns over the tariffs.
In response, Mexico and Canada have vowed to impose retaliatory tariffs, with Canadian Prime Minister Justin Trudeau announcing 25% tariffs on $155 billion worth of US goods.
Australian iron ore miners, including BHP, Rio Tinto, and Fortescue, saw their shares decline between 2% and 5% as concerns grew that the tariffs could hinder global growth. Rio Tinto is considered particularly vulnerable due to its Canadian aluminium business, which analysts estimate sells around 1.35-1.6 million metric tons to the US and may need to be redirected to other markets. Analyst Glyn Lawcock of Barrenjoey projected that the tariffs could impact Rio Tinto’s earnings before interest, taxes, depreciation, and amortization (EBITDA) by approximately 4%.
Shares of Taiwanese tech companies with factories in Mexico also fell, with Foxconn down 8%, Quanta down around 10%, and Inventec down 8%.
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Asian stock markets plummet as US tariffs spark trade war fears
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