US President Donald Trump has announced steep tariffs on auto imports and parts, provoking threats of retaliation from trading partners ahead of further promised trade levies next week, reports the AFP.
As Asian markets opened Thursday, shares in carmakers were down sharply.
Japan's government described the Washington move as "extremely regrettable," while Prime Minister Shigeru Ishiba said Tokyo was "considering all kinds of countermeasures."
"What we're going to be doing is a 25 percent tariff on all cars that are not made in the United States," Trump said, as he signed the order in the Oval Office.
The duties take effect at 12:01am (0401 GMT) on April 3 and impact foreign-made cars and light trucks.
Key automobile parts will also be hit within the month.
Canadian Prime Minister Mark Carney branded Trump's tariffs a "direct attack" on his country's workers, stating that his cabinet would meet Thursday to discuss retaliation.
Peter Navarro, Trump's senior counsellor for trade and manufacturing, blasted "foreign trade cheaters" for turning America's manufacturing sector into a "lower wage assembly operation for foreign parts."
He specifically targeted Germany and Japan for keeping high-value manufacturing within their own borders.
Since returning to the presidency in January, Trump has imposed fresh tariffs on Canada, Mexico, and China, along with a 25% duty on steel and aluminium.
The latest levies will be in addition to those already in place.
However, the White House noted that vehicles entering under the US-Mexico-Canada Agreement (USMCA) could qualify for a lower tariff rate based on their American content, while USMCA-compliant auto parts would remain tariff-free.
Uncertainty over Trump's trade plans has roiled financial markets, with consumer confidence falling in recent months due to fears of economic fallout.
Wall Street slumped before Trump’s announcement, with General Motors down 3.1%, while Ford managed a marginal 0.1% gain.
In Japan, Toyota shares fell 3.5%, Nissan lost 2.5%, and Honda declined 3.1%. Mitsubishi, Mazda, and Subaru also took heavy hits, along with Hyundai in South Korea.
Analysts warn that these tariffs could increase car prices by thousands of dollars and impact jobs in both the US and global markets.
"Imposing 25% tariffs on imported cars will have a devastating impact on many of our close trading partners," said Wendy Cutler, vice president at the Asia Society Policy Institute and a former US trade negotiator.
‘Liberation Day’ and future tariffs
Besides automobiles, Trump is also eyeing tariffs on pharmaceuticals, semiconductors, and lumber.
The announcement comes ahead of 2 April, dubbed "Liberation Day" by Trump, who has vowed more "reciprocal levies" to address what Washington considers unfair trade practices.
While Trump has previously invoked emergency economic powers to justify tariffs, the latest auto levies stem from a 2019 government report, which argued that excessive imports weakened the US economy and threatened national security.
