Asian auto stocks led markets lower on Thursday after U.S. President Donald Trump unveiled a 25% tariff on imported vehicles, expanding a global trade war and prompting criticism and threats of retaliation from affected U.S. allies.
According to Reuters, the new levies on cars and light trucks will take effect on April 3, the day after Trump plans to announce reciprocal tariffs aimed at the countries responsible for the bulk of the U.S. trade deficit. They come on top of duties already introduced on steel and aluminum, and on goods from Mexico, Canada and China.
The U.S. imported $474 billion worth of automotive products in 2024, including passenger cars worth $220 billion. Mexico, Japan, South Korea, Canada and Germany, all close U.S. allies, were the biggest suppliers.
European Commission President Ursula von der Leyen described the move as “bad for businesses, worse for consumers,” while Canadian Prime Minister Mark Carney labelled the tariffs a “direct attack” on Canadian workers and said retaliatory measures were being considered.
“We will defend our workers, we will defend our companies, we will defend our country, and we will defend it together,” Carney told reporters in Ottawa.
Automakers such as Toyota Motor and Mazda Motor led declines in stocks in Japan, which relies on autos for more than a quarter of its exports to the U.S. Shares of automakers in South Korea, Hyundai Motor and Kia Corp, fell sharply, while India automakers and parts suppliers also slid.
Japanese Prime Minister Shigeru Ishiba said Tokyo will put “all options on the table” in dealing with the new tariffs and South Korea said it would put in place an emergency response for its hard-hit auto industry by April.
Brazil’s President Luiz Inacio Lula da Silva said Trump risked damaging the U.S. economy with additional tariffs.
“Protectionism doesn’t help any country in the world,” Lula said on Thursday at a press conference in Tokyo, vowing to lodge a complaint with the World Trade Organisation over a trade levy on Brazilian steel.
