The Nikkei, which includes the top 225 representative stocks of the market, experienced a partial recovery at the end of trading but declined nearly 1% during today’s session, following the announcement by Donald Trump of a 25% tariff on automobile imports from April 2.
By mid-session, the Nikkei was down 0.93%, trading at 37,674.03 points, while the Topix fell 0.44%, standing at 2,800.58 points.
The Tokyo trading session opened lower, just hours after Trump’s announcement of escalating the trade war initiated by his administration.
“We will effectively charge a 25 percent tariff (on automobiles),” Trump declared at the White House, shortly before signing the executive order for the tariff measure, which he stated would not affect auto parts manufactured in the United States.
Trump explained that he anticipates the measure, which will also impact light trucks, to bring between 0 billion and billion into the U.S. treasury over the next two years.
“It will go into effect on April 2, and we will start charging on April 3,” the U.S. President added, emphasizing, “If you manufacture your vehicle in the United States, there are no tariffs.”
Japan is particularly vulnerable to the White House occupant’s decision. Last year, the automotive industry accounted for 28% of Japan’s exports to the United States, amounting to about billion (€37.12 billion). The automotive industry is a cornerstone of the Japanese economy, representing around 10% of jobs.
For the Japanese giant Toyota, number one worldwide in terms of vehicles sold, ahead of the German rival Volkswagen, the United States remains a crucial market. Japanese automakers also have a strong presence in Mexico, with interdependent production lines.
Japanese automobile manufacturers export about 1.37 million vehicles to the United States each year, following a peak of 3.43 million vehicles in 1986, highlighted last week by Masanori Katayama, president of the Japan Automobile Manufacturers Association (JAMA).
At the time, Katayama insisted that “significant production adjustments will occur” if customs duties are imposed.
Toyota recently announced the start of production in April at its 11th factory in the United States: of the 2.33 million vehicles sold in the U.S. last year, only 1.27 million were produced there.
Toyota has a factory in Canada (producing hybrid vehicles) and two factories in Mexico, whose production is predominantly destined for the American market and could also be heavily affected by the trade barriers.
If customs duties on Canadian or Mexican products, currently suspended, are reinstated, vehicles from these countries could be taxed at 50%.
Automobiles account for 27% of South Korea’s total exports to the United States: of the 2.78 million cars exported worldwide by the country last year, approximately 1.43 million were sent to the United States, with a total value of billion (€32.48 billion).
In an attempt to align with the Trump Administration and mitigate the impact of the trade barriers, Hyundai announced on Monday its plan to invest billion in the United States over the next four years.
