Global shares mostly sagged Thursday, after President Donald Trump announced he will slap 25 per cent tariffs on imported cars.
Trump said he was raising duties on auto imports to encourage more manufacturing in the U.S., but the impact will be complicated since U.S. automakers and even foreign manufacturers with factories in the U.S. source many of their components from around the world.
In pre-market trading early Thursday, General Motors Co.’s shares sank 6.5 per cent, while Ford Motor Co. lost 3 per cent.
France’s CAC 40 declined 0.6 per cent in early trading to 7,982.08, while Germany’s DAX fell 0.8 per cent to 22,661.50. Britain’s FTSE 100 dipped 0.7 per cent to 8,632.12.
The future for the S&P 500 was up 0.1 per cent while that for the Dow Jones Industrial Average gained 0.2 per cent.
In Asian trading, Japan’s benchmark Nikkei 225 lost 0.6 per cent to finish at 37,799.97. Shares of automakers took big hits.
Toyota Motor Corp.’s stock fell 2 per cent, while Honda Motor Co. stock dipped 2.5 per cent. Nissan was down 1.7 per cent. Mazda Motor Corp.’s shares dropped 6 per cent, while Subaru’s lost nearly 5 per cent. Mitsubishi Motors Corp. lost 3.2 per cent.
Japanese Prime Minister Shigeru Ishiba has sought to persuade Trump to exempt Japan from the higher tariffs, and he reiterated his position Thursday.
”We strongly request that tariff measures not be applied to Japan,” he told reporters.
When asked about possible responses, he said without giving specifics: “All options are naturally subject to consideration.“
Ivan Espinosa, who will become chief executive at Nissan Motor Corp. April 1, told reporters earlier this week that the automaker was considering several scenarios as what Trump might do was “fluid.”
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Toyota declined comment.
South Korea’s Kospi fell 1.4 per cent to 2,607.15. Korean automakers also felt a chill from Trump’s announcement. Hyundai Motor Co.’s shares traded in Seoul lost 4.3 per cent while Kia Corp.’s shares dropped 3.5 per cent.
Shares in Greater China, apart from Taiwan, were higher. Hong Kong’s Hang Seng gained 0.4 per cent to 23,578.80, while the Shanghai Composite index was up 0.2 per cent at 3,373.75.
Chinese automakers and parts manufacturers have been expanding sales around the world, but not in the United States, so any impact from the tariffs announcement would be an indirect one.
But Taiwan’s benchmark, the Taiex, sank 1.4 per cent. In Australia, the S&P/ASX 200 dropped 0.4 per cent to 7,969.00.
Trade tensions are likely to heighten in coming weeks, analysts said.
“Higher trade barriers may disrupt supply chains and slow growth. Auto, metals, pharma and technology face a direct hit from U.S. tariffs,” said Eunice Tan, head of Asia-Pacific credit research at S&P Global Ratings.
“Fears of a sharper global downturn could hit demand and confidence, squeezing the region’s downstream and consumer discretionary sectors.”
On Wednesday, the S&P 500 sank 1.1 per cent, while the Dow industrials shed 0.3 per cent. Weakness for Big Tech sent the Nasdaq composite to a market-leading drop of 2 per cent, at 17,889.01.
Some U.S. automakers declined after Trump said he would announce his tariffs on auto imports.
U.S. auto giants have already spread their production around North America following prior free-trade deals encompassing the United States, Canada and Mexico.
In other dealings early Thursday, benchmark U.S. crude lost 15 cents to $69.50 a barrel. Brent crude, the international standard, fell 17 cents to $72.89 a barrel.
In currency trading, the U.S. dollar rose to 150.87 Japanese yen from 150.54 yen. The euro cost $1.0765, up from $1.0754.
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