Japan’s Topix index saw a decline of 2.18% to 2,754.07 points at the start of the session.
The Nikkei index reflects the unweighted average of the top 225 stocks on the Tokyo Stock Exchange, while the Topix index aggregates the values of the 1,600 largest listed companies.
In statements to Parliament, Prime Minister Shigeru Ishiba indicated today that the impact of tariffs would be “very significant.” Ishiba noted that the government is assessing the effect on various industries.
U.S. President Donald Trump expanded his tariff offensive on Wednesday, announcing an additional 25% tariff on the automotive sector, covering the importation of automobiles and parts.
These tariffs will apply to “all cars not manufactured in the United States,” declared the U.S. president from the White House, noting that they will take effect “on April 2.”
Japan is especially vulnerable to this decision. Last year, the automotive industry accounted for 28% of Japanese exports to the United States, valued at approximately billion (€37.12 billion). The automotive industry is a cornerstone of the Japanese economy, representing about 10% of jobs.
For the Japanese giant Toyota, which leads the world in vehicle sales ahead of its German rival Volkswagen, the United States remains a crucial market. Japanese automakers also have a significant presence in Mexico, with interdependent production lines.
Each year, Japanese car manufacturers export around 1.37 million vehicles to the United States, after peaking at 3.43 million vehicles in 1986, noted Masanori Katayama, president of the Japan Automobile Manufacturers Association (JAMA), last week.
At the time, Katayama stressed that “significant production adjustments will take place” if tariffs are imposed.
Toyota recently announced the start of production in April at its 11th U.S. factory: of the 2.33 million vehicles it sold in the United States last year, only 1.27 million were produced within the country.
Toyota has a plant in Canada (producing hybrid vehicles) and two plants in Mexico, with production mainly intended for the American market, which could also be severely impacted by trade barriers.
If tariffs on Canadian or Mexican goods, currently suspended, are reapplied, cars from these countries could face a 50% tax.
Automobiles represent 27% of South Korea’s total exports to the United States: of the 2.78 million cars exported by the country globally last year, about 1.43 million were sent to the United States, totaling billion (€32.48 billion).
In an effort to align more closely with the Trump Administration and mitigate the impact of trade barriers, Hyundai announced on Monday plans to invest billion in the United States over the next four years.
