Shares of Japanese automakers and South Korean battery manufacturers fell on Tuesday after U.S. President Donald Trump issued fresh threats of tariffs and revoked an executive order promoting electric vehicles. These swift policy moves, occurring within hours of Trump’s inauguration, have raised concerns about their impact on Asia’s manufacturing powerhouses—key U.S. allies Japan and South Korea.
Trump signalled a potential 25% tariff on goods from Canada and Mexico, warning the action could be implemented by February 1. The announcement has reignited fears for automakers and suppliers that rely on these countries as manufacturing hubs for vehicles exported to the United States.Japanese automakers, already grappling with the transition to electric vehicles and competition from Chinese rivals, saw their stocks decline.
Nissan Motor shares dropped 0.3% to 420.9 yen, erasing earlier gains. The company operates two plants in Mexico, producing models like the Sentra and Kicks, exporting approximately 300,000 vehicles annually to the U.S.
Meanwhile, Honda Motor shares fell 0.3% to 1,479 yen after an initial rise to 1,526 yen at market open. Honda sends 80% of its Mexican production to the U.S., with COO Shinji Aoyama warning in November that tariffs could force a shift in manufacturing operations.
Japanese Finance Minister Katsunobu Kato stated the government would respond “appropriately” after reviewing Trump’s policy agenda.
The policy changes also impacted South Korean battery giants. LG Energy Solution dropped 5%, while Samsung SDI and SK Innovation each fell by over 4%.
The U.S. tariff threat compounds existing challenges for manufacturers adapting to the electric vehicle boom and increasing competition from China.
The developments highlight the potential for U.S. trade policy shifts to disrupt global supply chains, leaving industries in allied nations bracing for economic fallout.
