Shares of Japanese automakers and South Korean battery manufacturers tumbled on Tuesday, following comments from U.S. President Donald Trump suggesting possible tariffs on Canadian and Mexican imports. Trump’s move to revoke a previous executive order on electric vehicles added to market jitters, signaling a substantial policy shift that could reshape the global auto industry.
In contrast, many Chinese manufacturers saw their stocks climb after Trump’s inauguration speech made no direct mention of tariffs against China, easing concerns that Beijing would face immediate trade actions. Meanwhile, South Korean shipbuilders rallied on optimism that Trump’s plan to boost U.S. oil and gas production could drive demand for new transport vessels.
The volatility underscores how rapidly shifting U.S. policies may impact major Asian exporters. Japan and South Korea—long considered close U.S. allies—have automakers and suppliers already grappling with an industry-wide transition to electric vehicles and stiff competition from China’s fast-growing brands.
Trump floated the possibility of slapping a 25% tariff on Canada and Mexico, potentially starting as soon as February 1. Mexico has long served as a cost-efficient manufacturing hub for many international carmakers, including Honda and Mazda.
Honda Motor (7267.T) ended 0.3% lower at 1,478 yen, surrendering early gains. The automaker sends 80% of its Mexican output to the U.S. market, and Chief Operating Officer Shinji Aoyama warned in November that Honda might shift production if permanent tariffs on imported vehicles are introduced.
Mazda Motor (7261.T), exporting around 60% of the approximately 209,000 cars produced at its plant in Guanajuato, Mexico, saw its shares slip 2.0% on Tuesday.
Adding to the uncertainty, the Bank of Japan raised interest rates to their highest level in 17 years. This move could further complicate the outlook for Japanese exporters, as a stronger yen typically reduces competitiveness in overseas markets.
Overall, these developments highlight the fragile balance facing Asian car and battery makers. As Trump moves swiftly to alter trade policies, companies across the region must now adapt to potentially higher export costs, a shifting regulatory environment, and intensifying global competition.