By Tom Westbrook and Ankur Banerjee
SINGAPORE (Reuters) – Worries about throttled global trade and a hit to auto industry profits sent shares of car makers tumbling and drove markets broadly weaker on Thursday after President Donald Trump put a wall of tariffs around the U.S. auto sector.
Some $16.5 billion was wiped from transport stocks in Tokyo, according to LSEG data. They also slid in South Korea, and Europe was braced to sell, with the euro at three-week lows and German DAX futures down 0.7%.
Toyota fell 2.7%, Honda 3% and Nissan 2.2%. Hyundai Motor and Kia in South Korea dropped about 4% each. [MKTS/GLOB][.T][.KS]
Volkswagen, Europe’s top car maker, is in the frame since 43% of its U.S. sales are sourced from Mexico, S&P Global Mobility estimates, and even U.S. marques were down in after-hours trade since their supply chains spread across North America.
The tariffs have been well flagged and so some of the losses were limited because of how much had already been priced in and because car ownership is so popular in the United States that investors think consumers will eventually just keep buying.
But the signal – hurting allies and car buyers – was nevertheless unsettling for markets which have been slow to accept that the levies may become permanent fixtures and drive lasting changes in world trade flows.
The head of Germany’s car industry association said the tariffs are a “fatal signal” for global trade.
“It’s hard not to interpret this as anything but a cue for higher prices and lower growth,” said Prashant Newnaha, senior Asia-Pacific rates strategist at TD Securities in Singapore.
Trump said 25% tariffs on imported cars and light trucks would begin on April 3. Almost half of the 16 million cars sold in the U.S. last year were imported, with a total value exceeding $330 billion, Goldman Sachs analysts said.
The investment bank’s analysts expect a hit to sales, before a gradual recovery. But the damage would be enough to put Toyota, Honda, Nissan, Mazda Motor, Subaru and Mitsubishi Motors below market consensus profit estimates for the 2026 financial year – with Mazda taking the heaviest hit.
Mazda shares sank 6.1% on Thursday.
SHAKE UP
The new levies could add thousands of dollars to the cost of an average U.S. vehicle purchase and impede production due to the intertwined manufacturing operations developed over decades by car makers across Canada, Mexico and the United States.
In U.S. after-hours trade, General Motors tumbled 6%, while shares in Ford fell almost 5%. Shares in Tesla slipped about 1%, drawing some support since the tariffs add to already punitive levies keeping Chinese electric vehicle makers mostly out of the U.S. market.
BYD, which is leading an overseas push by Chinese automakers, said it has no plans to sell into Canada or the U.S. but will grow global sales and build factories abroad. Its shares rose 2.3% on Thursday for a 53% gain so far this year.
Earlier in March, Volkswagen said it was working on back-up plans for how its passenger car brand could tackle U.S. tariffs on imports from Mexico, while BMW prepared to absorb the cost.
Other than automakers’ shares, market moves were muted. Bond markets were steady. The Mexican peso slipped, though only slightly, outside of its usual trading hours, and the Canadian dollar was steady.
Investors are waiting for further details of a wider range of tariffs Trump says he will levy on trading partners next week.
“I think the big concern is that not only will these tariffs be disruptive and economically harmful, but they indicate that the Trump administration’s shake-up of global trade won’t necessarily end with next week’s announcement,” said Kyle Rodda, a market analyst at Capital.com in Melbourne.
“This potentially drags out trade uncertainty even longer and raises the question of how radical a change to the global trade order is Trump trying to bring about.”
(Reporting by Tom Westbrook; Editing by Muralikumar Anantharaman)
