Hong Kong – Asian equity markets plunged Thursday following U.S. President Donald Trump’s announcement of sweeping 25% tariffs on all imported vehicles and auto parts, intensifying concerns about his aggressive trade policies and the risk of a global recession.
The new tariffs—effective 12:01 a.m. Eastern Time (0400 GMT) on April 3—will target foreign-made cars and light trucks, with duties on key automobile parts to follow within a month. The move has sparked outrage among major U.S. trading partners, including Japan, South Korea, Canada, and Germany, while causing turmoil in global financial markets.
Global Backlash and Economic Fears
The decision prompted immediate condemnation from U.S. allies. Japan’s government described the tariffs as “extremely regrettable,” while Canadian Prime Minister Mark Carney labeled them a “direct attack” on Canadian workers.
Despite Trump’s suggestion that upcoming reciprocal tariffs—slated for April 2, which he dubbed “Liberation Day”—could be “very lenient,” global markets remain on edge.
“Trump’s not bluffing — or at least he’s doing a damn good job pretending he’s not,” said Stephen Innes of SPI Asset Management.
“If he goes full throttle with this round of tariffs, markets are facing the worst-case scenario: faster inflation, slower growth, and a fresh wave of volatility,” he warned.
Approximately half of the vehicles sold in the United States are manufactured domestically, while Mexico, Canada, Japan, and South Korea are among the largest sources of imported cars. More than 50% of U.S.-assembled cars rely on foreign-made parts, which will also be subject to the new duties.
Asian Carmakers Take a Hit
The auto sector bore the brunt of the market’s reaction. In Tokyo, Toyota and Honda each fell more than 3%, while Nissan declined 2.5%. In South Korea, Hyundai dropped over 4%.
U.S.-listed auto giants also faced after-hours losses, with General Motors, Ford, and Stellantis all deep in the red following Trump’s announcement.
The broader Asian equity market followed suit, reflecting heightened investor anxiety:
- Tokyo’s Nikkei 225 dipped 0.9%
- Seoul’s KOSPI fell nearly 1%
- Sydney, Wellington, Taipei, and Manila all posted losses
However, Hong Kong’s Hang Seng Index edged up 0.6%, while Shanghai’s Composite Index gained 0.2%, buoyed by speculation that Trump may ease tariffs on China to facilitate the sale of social media giant TikTok.
Market Uncertainty Deepens
The U.S. market had already shown signs of strain before Trump’s tariff announcement. On Wednesday, all three of Wall Street’s major indexes posted losses, with the CBOE Volatility Index—often called the “fear gauge”—jumping 7%.
Investors remain uneasy amid signs of slowing consumer confidence. A Tuesday report indicated that U.S. consumer sentiment has fallen to its lowest level since 2021, largely due to rising concerns about inflation and trade policy uncertainty.
Key global market figures as of Thursday:
- Tokyo – Nikkei 225: Up 0.9% at 37,674.03
- Hong Kong – Hang Seng Index: Up 0.6% at 23,624.74
- Shanghai – Composite Index: Up 0.2% at 3,374.63
- Euro/dollar: Up at $1.0766
- Pound/dollar: Up at $1.2900
- Dollar/yen: Down at 150.11 yen
- Brent crude oil: Up 0.1% at $73.85 per barrel
In New York, the Dow Jones Industrial Average closed down 0.3% at 42,454.79, while London’s FTSE 100 edged up 0.3% to 8,689.59.
Outlook: More Turbulence Ahead?
With April 2’s “Liberation Day” approaching and the prospect of further tariffs across key industries such as pharmaceuticals and semiconductors, market watchers are bracing for continued volatility.
Trump’s trade strategy, aimed at revitalizing American manufacturing, is likely to further strain ties with longstanding U.S. allies while inflaming fears of a global economic slowdown.
As uncertainty grows, investors and policymakers will closely monitor the White House’s next moves—and how global markets respond.
