TOKYO/SEOUL (Reuters) – Shares in Japanese automakers and South Korean battery makers were hit on Tuesday after U.S. President Donald Trump said he may soon impose tariffs on Canada and Mexico and revoked the previous administration’s executive order on electric vehicles.
The two moves by Trump within hours of his inauguration underscore how changes in US policy could crowd out manufacturing giants in close US allies Japan and South Korea. Automakers are already facing massive disruption from the pivot to electric vehicles and the stunning rise of Chinese rivals.
Trump said he was considering 25% tariffs and that it could happen on February 1st. The threat of potential tariffs for the two countries has loomed over the Asian manufacturing industry for months. Several automakers—and their suppliers—build vehicles in the two countries that export to the United States.
Shares of Nissan ( OTC: ) Motor, Japan’s third-largest automaker, erased morning gains and were in negative territory, down 0.3% to 420.9 yen. Nissan has two plants in Mexico, where it produces the Sentra, Versa and Kicks models for the US market. It exports about 300,000 vehicles to the U.S. annually, CEO Makoto Uchida said in November.
Honda (NYSE: ) Motor sends 80% of its Mexican production to the U.S. market, and its chief operating officer Shinji Aoyama warned in November that he would have to consider shifting production if the United States imposed permanent tariffs on imported vehicles.
Honda shares also reversed early gains and fell 0.3% to ¥1,479. At the opening of trade, they rose as high as 1,526 yen.
Japanese Finance Minister Katsunobu Kato said on Tuesday that the country would respond “appropriately” after examining the new president’s policies.
Shares of South Korean battery makers fell, while LG Energy Solution fell 5%. Samsung SDI (KS:) i SK Innovation (KS:) each lost more than 4%.
