Asian Automakers Stocks Plunge 9% on Trump's 25% Tariff

U.S. President Donald Trump's recent announcement of a 25% tariff on all "non-American-made" automobiles has sent ripples through the global automotive industry, with Asian car manufacturers feeling the brunt of the impact. The policy, set to take effect later this week, has already put significant pressure on related companies.

Following the policy announcement, Toyota's stock price fell by 9.4% over three trading days, while Nissan's stock dropped by 9.3%, and Hyundai Motor Company experienced a significant decline. The policy is expected to have a profound impact on Japanese and South Korean automakers, who together account for a significant portion of cars imported into the U.S. and a substantial share of imports from outside North America.

Data from a U.S. automotive trading platform shows that in 2024, six out of the top eight car companies in the U.S. by sales volume are Asian brands. Toyota leads with 1.98 million units sold, surpassing domestic giants Ford and Chevrolet. Honda and Nissan follow in fourth and fifth places, respectively, with Hyundai and Kia close behind, and Subaru ranking eighth. These companies derive a significant portion of their revenue from the North American market, making it difficult for them to offset the impact of the tariffs through other channels.

Toyota and Nissan have chosen not to comment on the matter, while the other four companies have not responded to interview requests. The U.S. imported $474 billion worth of automotive products in 2024, with passenger cars accounting for $220 billion. The policy is expected to disrupt the global automotive supply chain, particularly for electric vehicles and battery manufacturers, which are still not fully dominated by China.

The tariff is part of a broader trade policy aimed at reducing the U.S. trade deficit and protecting domestic industries. However, the long-term effects of the policy remain uncertain, and it is unclear whether the tariffs will be permanent or subject to future negotiations. The policy has already sparked concerns about potential retaliation from affected countries and the broader implications for global trade relations.

Despite having large production bases in the U.S., Toyota and Nissan's expansion plans are insufficient to offset the impact of the tariffs. The idea of completely eliminating supply chains from Mexico and Canada is seen as impractical. The tariffs will increase production costs in the U.S., and the core issue is whether automakers will absorb the costs or pass them on to consumers. It is expected that they will have to bear a significant portion of the pressure, making the situation extremely challenging.

However, there is a notable exception among Asian automakers: Suzuki Motor Corporation. Suzuki, which does not operate in the U.S. market, has seen its stock price perform significantly better than its peers. The company, which focuses on the Indian market, is seen as a unique case in the industry, unaffected by the tariffs. Suzuki's stock has risen slightly this year, while Toyota, Nissan, and Hyundai-Kia have all seen declines.