By Hyunjoo Jin and Daniel Leussink
TOKYO/SEOUL (Reuters) – Shares of Japanese automakers and South Korean battery makers fell on Tuesday, after U.S. President Donald Trump said he may soon impose tariffs on Canada and Mexico and revoked the previous administration’s executive order on electric vehicles.
But Chinese manufacturers bucked the trend, with stocks opening higher after Trump failed to target China in his inauguration speech or immediately impose tariffs on Beijing as previously promised.
Volatility in Asian stocks hours after Trump’s inauguration highlights how policy changes under Trump could hurt big manufacturers in some of Washington’s closest allies in the region, Japan and Korea South. Automakers in both countries – and their suppliers – are already facing disruption from the shift to electric vehicles and intense competition from growing Chinese rivals.
Trump has said he is considering imposing 25% tariffs on Canada and Mexico and that the move could take place on February 1. The threat of potential tariffs on both countries looms over Asian manufacturers. Mexico, in particular, has long been a low-cost manufacturing hub for automakers, including Asian heavyweights.
“President Trump will remain steadfast in his intention to continue implementing additional tariffs across the board, both as a means of resolving issues with other countries and as a means of reducing the U.S. trade deficit,” said Takahide Kiuchi, executive economist at Nomura Research. Institute, said in a note to clients.
Shares of Nissan Motor, Japan’s third-largest automaker, erased much of the morning’s gains and were flat at 423.9 yen, after hitting 437.8 yen in morning trading. Nissan has two factories in Mexico, where it manufactures the Sentra, Versa and Kicks models for the US market. It exports about 300,000 vehicles to the United States a year, its chief executive Makoto Uchida said in November.
“GREAT CONCERN”
Honda Motor ships 80% of its Mexican production to the U.S. market, and its chief operating officer, Shinji Aoyama, warned in November that it would have to consider shifting production if the United States imposed permanent tariffs on imported vehicles.
Shares of Honda also reversed early gains and were flat at 1,483 yen. They had reached 1,526 yen when trading opened.
The Trump administration’s economic policies are of great concern to the Japanese economy and businesses. A slowdown in the U.S. and global economy due to additional tariffs and other measures will worsen Japan’s export environment,” Kiuchi said in his note, comments that could likely be applied to other countries of the region.
