Global Markets Reel as Trump Imposes Tariffs on Mexico, Canada, and China

TOKYO: Shares of Japanese and South Korean car makers and their suppliers led declines in Asia on Monday, as exporters across the region were walloped by U.S. President Donald Trump’s introduction of sweeping tariffs on Mexico, Canada and China.

Automakers Take a Hit

The move by Trump, though widely expected, knocked some of the world’s biggest manufacturers, as investors grappled with the prospect of weakening demand from the world’s top economy and, more worryingly, the possibility of a downturn in global growth.

Automakers were among the hardest hit. Many Japanese and South Korean car makers, and their suppliers, have operations in Mexico and have long exported cars made there to the United States.

Toyota, Honda, and Nissan Fall

Toyota, the world’s top automaker, and smaller rival Nissan fell more than 5%. Honda tumbled more than 7%.

Nissan has two plants in Mexico, where it makes the Sentra, Versa and Kicks models for the U.S. market. It exports about 300,000 vehicles to the U.S. a year, Chief Executive Makoto Uchida said in November.

Honda sends 80% of its Mexican output to the U.S. market, and its chief operating officer Shinji Aoyama warned in November it would have to think about shifting production if the U.S. were to impose permanent tariffs on imported vehicles.

South Korean Firms Feel the Pain

South Korea’s Kia Motors, which has a factory in Mexico, fell nearly 7%. South Korean electric vehicle battery firms and battery materials makers, which had plans to build factories in Canada to supply to GM, Ford and other companies, slumped. POSCO Future M and EcoPro BM dived 9.1% and 8.7%, respectively.

Global Markets React

Trump imposed 25% tariffs on Mexican and most Canadian imports and 10% on goods from China. While mainland China’s markets are closed for the Lunar New Year holiday, Chinese stocks listed in Hong Kong slid on Monday, reflecting the concern about the tariffs.

Rio Tinto and BHP Take a Hit

Australia’s big iron ore miners, BHP, Rio Tinto, and Fortescue were down between 2 and 5 percent on Monday on prospects the tariffs would stunt global growth.

Rio Tinto was seen as most exposed due to its Canadian aluminium business, which analysts estimate sells around 1.35-1.6 million metric tons into the U.S. and which would likely be rerouted to other markets. The tariffs would likely mean a 4% impact to its earnings before interest, taxes, depreciation, and amortization (EBITDA), according to analyst Glyn Lawcock of Barrenjoey.

Conclusion

The imposition of tariffs by the U.S. on Mexico, Canada, and China has sent shockwaves through global markets, with automakers and their suppliers, as well as other exporters, suffering the most. The impact is likely to be felt across the globe, with concerns about weakening demand and a potential downturn in global growth growing.

FAQs

* What were the tariffs imposed by the U.S. on Mexico, Canada, and China?
+ 25% on Mexican and most Canadian imports, and 10% on goods from China.
* Which automakers were affected by the tariffs?
+ Toyota, Honda, and Nissan, among others.
* How did South Korean firms fare in the wake of the tariffs?
+ Kia Motors fell nearly 7%, while South Korean electric vehicle battery firms and battery materials makers slumped.
* How did global markets react to the tariffs?
+ Chinese stocks listed in Hong Kong slid, and Australia’s big iron ore miners, BHP, Rio Tinto, and Fortescue were down between 2 and 5 percent.
* What impact will the tariffs have on global growth?
+ Concerns are growing about a potential downturn in global growth, with the tariffs likely to stunt growth and lead to a weakening of demand.