Shares of global automakers took a dive on Thursday after President Donald Trump put a wall of tariffs around the US automotive sector, exacerbating worries over the impact on global trade and potential hits to industry profits.
Trump on Wednesday followed through on weeks of threats for new tariffs on imported cars, saying a 25% import tax on vehicles not built in the US would begin on April 3.
Although the duties have been well flagged, shares in automakers across the globe tumbled on Thursday, with US auto giant General Motors sliding 7% in premarket trading and Ford Motor shedding about 4%.
Trump's tariffs leave American automakers vulnerable after years of building an extensive cross-border supply chain and expanding assembly facilities in Mexico and Canada that are crucial to supporting their US sales.
As European markets opened, shares in Volkswagen, Europe's top car maker, dropped 2%, while those in luxury brands BMW and Mercedes-Benz fell about 3% each.
In Japan overnight, some $16.5 billion was wiped off transport stocks, according to LSEG data, as shares in Toyota fell 2.7%, Honda 3% and Nissan 2.2%. Hyundai Motor and Kia in South Korea dropped about 4% each.
"Mexico, Japan, South Korea, Canada and Germany are the biggest suppliers of auto-related products to the US and stand to lose out if Trump doesn't back down," said Russ Mould, investment director at AJ Bell.
Volkswagen is in the frame since 43% of its US sales are sourced from Mexico, S&P Global Mobility estimates, as is Chrysler-owner Stellantis, which, along with Ford, is one of the top producers of US vehicles based in Mexico.
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