Shares in some of the world’s largest auto companies tumbled yesterday after US President Donald Trump put a wall of tariffs around the US vehicle sector, adding to worries about the hit to global trade and industry profits.
Trump said 25 percent tariffs on imported cars and light trucks would begin on Thursday next week, and although the duties have been well flagged, shares in automakers from Frankfurt to Seoul tumbled.
As European markets opened, shares in Volkswagen AG, the most vulnerable among German automakers to tariffs due to its large supply base in Mexico and lack of US production for its Audi and Porsche brands, dropped 3.2 percent.
Photo: Issei Kato, Reuters
Chrysler parent Stellantis NV slumped 5.2 percent, BMW fell 4.2 percent, Porsche AG slid 4.6 percent, car parts maker Continental AG shed 3.2 percent while Volvo Cars AB slipped 1.3 percent.
In Japan, about US$16.5 billion was wiped off transport stocks, as shares in Toyota Motor Corp fell 2.7 percent, Honda Motor Co 3 percent and Nissan Motor Co 2.2 percent, LSEG data showed.
Hyundai Motor Co and Kia Motors Corp in South Korea dropped about 4 percent each, while India’s Tata Motors Ltd, which exports Jaguar Land Rovers to the US, lost more than 5 percent in Mumbai.
“Within the Asia-Pacific region, the car levies will hit Japan and South Korea the hardest,” Moody’s Analytics economists Stefan Angrick and Dave Chia said in a note. “About six percent of Japan’s total exports are cars shipped to the US. In South Korea’s case, it’s four percent. Such a sizeable tariff hike will undermine confidence, hit production and reduce orders.”
The retreat in the auto sector hit broader markets across Asia, which were already shaky owing to worries over Trump’s trade agenda.
Taipei, Tokyo, Sydney, Seoul, Wellington, Bangkok and Manila all fell, while Hong Kong and Shanghai eked out gains along with Singapore and Mumbai.
Volkswagen is in the frame, since 43 percent of its US sales are sourced from Mexico, S&P Global Mobility estimates, as is Stellantis, which, along with Ford Motor Co, is one of the top producers of US vehicles based in Mexico.
The head of Germany’s car industry association said the tariffs are a “fatal signal” for global trade.
“The risk of a global trade conflict — with negative consequences for the global economy and growth, prosperity, jobs and consumer prices — is high on all sides,” VDA president Hildegard Mueller said, calling for bilateral US-EU talks to find a solution.
Almost half of the 16 million cars sold in the US last year were imported, with a total value exceeding US$330 billion, Goldman Sachs Group Inc analysts said in a note.
The new levies could add thousands of US dollars to the cost of an average US vehicle purchase and impede production due to the intertwined manufacturing operations developed over decades by automakers across Canada, Mexico and the US.
“In our view these initial tariffs [if they hold in their current form] would be a hurricane-like headwind to foreign [and many US] automakers and ultimately push the average price of cars up US$5,000 to US$10,000,” Wedbush Securities Inc analysts said.
US auto stocks tumbled in premarket trading yesterday, with General Motors Co sliding 7 percent and shares in Ford falling almost 4 percent, as their supply chains are spread across North America.
Shares in Tesla Inc slipped about 1 percent, with limited losses, as the tariffs add to already punitive levies keeping Chinese electric vehicle makers mostly out of the US market.
Additional reporting by AFP
HORMUZ ISSUE: The US president said he expected crude prices to drop at the end of the war, which he called a ‘minor excursion’ that could continue ‘for a little while’ The United Arab Emirates (UAE) and Kuwait started reducing oil production, as the near-closure of the crucial Strait of Hormuz ripples through energy markets and affects global supply. Abu Dhabi National Oil Co (ADNOC) is “managing offshore production levels to address storage requirements,” the company said in a statement, without giving details. Kuwait Petroleum Corp said it was lowering production at its oil fields and refineries after “Iranian threats against safe passage of ships through the Strait of Hormuz.” The war in the Middle East has all but closed Hormuz, the narrow waterway linking the Persian Gulf to the open seas,
RATIONING: The proposal would give the Trump administration ample leverage to negotiate investments in the US as it decides how many chips to give each country US officials are debating a new regulatory framework for exporting artificial intelligence (AI) chips and are considering requiring foreign nations to invest in US AI data centers or security guarantees as a condition for granting exports of 200,000 chips or more, according to a document seen by Reuters. The rules are not yet final and could change. They would be the first attempt to regulate the flow of AI chips to US allies and partners since US President Donald Trump’s administration said it rescinded its predecessor’s so-called AI diffusion rules. Those rules sought to keep a significant amount of AI
Apple Inc increased iPhone production in India by about 53 percent last year and now makes a quarter of its marquee devices there, reflecting the US company’s efforts to avoid tariffs on China. The company assembled about 55 million iPhones in India last year, up from 36 million a year earlier, people familiar with the matter said, asking not to be named because the numbers aren’t public. Apple makes about 220 million to 230 million iPhones a year globally, with India’s share of the total increasing rapidly. Apple has accelerated its expansion in the world’s most populous country in recent years, bolstered
HEADWINDS: The company said it expects its computer business, as well as consumer electronics and communications segments to see revenue declines due to seasonality Pegatron Corp (和碩) yesterday said it aims to grow its artificial intelligence (AI) server revenue more than 10-fold this year from last year, driven by orders from neocloud solutions clients and large cloud service providers. The electronics manufacturing service provider said AI server revenue growth would be driven primarily by the Nvidia Corp GB300 server platform. Server shipments are expected to increase each quarter this year, with the second half likely to outperform the first half, it said. The AI server market is expected to broaden this year as more inference applications emerge, which would drive demand for system-on-chip, application-specific integrated circuits
RSS