Stocks fall on Trump’s auto tariffs, China bucks the trend

Global stocks fell sharply on Thursday, led by heavy losses in Japan and South Korea, after U.S. President Donald Trump announced new tariffs on auto imports. However, China showed resilience, with its markets bucking the downward trend.

Key Market Reactions

• Japan’s Nikkei fell 1%, and South Korea’s KOSPI dropped 1.3%.
• European stock futures pointed to a lower open, with pan-European STOXX 50 futures down 0.5%.
• Wall Street futures recouped earlier losses, inching up 0.1%.

Impact on Automakers

Trump’s announcement of a 25% tariff on automotive imports hit automakers hard:

• Toyota Motor shares tumbled 2.6%, while Mazda and Subaru plunged about 6%.
• U.S. automakers also suffered, with General Motors slumping 6% and Ford falling almost 5%.

China’s Resilience

In contrast, Chinese markets outperformed the region:

• The blue-chip index rose 0.4%, and Hong Kong’s Hang Seng rallied 1%.
• Chinese EV giant BYD jumped 2.3%.

Jason Chan, a senior investment strategist, noted that Chinese automakers have limited exposure to the U.S. market, which helped cushion the impact.

Global Implications

Analysts warn that the tariffs could stoke U.S. inflation, with the Federal Reserve already pausing its policy easing cycle. Meanwhile, international responses are being closely watched:

• Japan’s Prime Minister stated that all options are on the table in response to the tariffs.
• Canada and the European Union expressed regret and are seeking negotiated solutions.

Conclusion

The global market’s reaction to Trump’s auto tariffs highlights the interconnectedness of economies and the potential for significant ripple effects. As nations respond, the coming weeks will be critical in shaping the global economic landscape.

Source: Reuters