Concerns over disrupted global trade and potential losses in the auto industry sent shares of car makers plunging and led to broader market declines on Thursday, following President Donald Trump’s announcement of tariffs on the U.S. auto sector.
In Tokyo, transport stocks lost $16.5 billion, according to LSEG data. Stocks also dropped in South Korea, and European markets braced for further losses, with the euro hitting a three-week low and German DAX futures falling 0.7%.
Toyota (NYSE: TM) saw a 2.7% drop, Honda (NYSE: HMC) fell 3%, and Nissan (OTC :NSANY) decreased by 2.2%. In South Korea, Hyundai Motor (OTC: HYMTF) and Kia both dropped by around 4%.
Volkswagen (ETR: VOWG_p), Europe’s largest automaker, was particularly affected, as 43% of its U.S. sales come from Mexico, according to S&P Global Mobility. Even U.S. automakers faced losses in after-hours trading, as their supply chains span across North America.
Although the tariffs had been anticipated, limiting some losses, concerns remained about their long-term impact. Despite car ownership being deeply ingrained in U.S. culture, investors are uncertain about the lasting effects these tariffs could have on trade and global supply chains.
The head of Germany’s car industry association called the tariffs a “fatal signal” for global trade.
Prashant Newnaha, senior Asia-Pacific rates strategist at TD Securities in Singapore, noted, “It’s hard not to interpret this as anything but a cue for higher prices and lower growth.”
Trump announced that 25% tariffs on imported cars and light trucks will begin on April 3. Nearly half of the 16 million cars sold in the U.S. last year were imports, valued at over $330 billion, according to Goldman Sachs analysts. The bank predicts a dip in sales before a slow recovery. The tariffs could also push automakers like Toyota, Honda, Nissan, Mazda, Subaru, and Mitsubishi Motors below market profit estimates for 2026, with Mazda expected to be hit hardest.
Mazda shares dropped by 6.1% on Thursday.
The new tariffs could add thousands of dollars to the cost of an average vehicle in the U.S. and disrupt production due to the complex, decades-old manufacturing relationships between carmakers in Canada, Mexico, and the U.S.
In after-hours trading, shares of General Motors (NYSE: GM) fell 6%, while Ford’s stock dropped nearly 5%. Tesla (NASDAQ :TSLA) slipped about 1%, though the tariffs might benefit Tesla by keeping Chinese electric vehicle makers largely out of the U.S. market.
BYD (SZ:002594), a Chinese automaker expanding globally, announced it would not sell in Canada or the U.S. but would focus on growing sales and building factories overseas. Its shares rose 2.3% on Thursday, marking a 53% increase for the year.
Earlier in March, Volkswagen indicated it was developing plans to address U.S. tariffs on Mexican imports, while BMW (ETR :BMWG) said it would absorb the added costs.
Outside of the auto sector, market movements were muted. Bond markets remained stable, the Mexican peso slipped slightly outside of regular trading hours, and the Canadian dollar held steady.
Investors are waiting for more details on the broader tariffs Trump plans to impose on trading partners next week.
Kyle Rodda, a market analyst at Capital.com in Melbourne, expressed concern that the tariffs could signal an extended period of trade uncertainty. “The big concern is that not only will these tariffs be economically harmful, but they indicate that the Trump administration’s shake-up of global trade won’t necessarily end with next week’s announcement,” Rodda said. “This could drag out trade uncertainty and raise questions about how radical a shift Trump is trying to bring to global trade.”
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