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New tariffs on auto imports recently announced by the U.S. government have created significant turmoil among Asian car manufacturers, who are bracing for the impending implementation of these duties.
On March 27, U.S. President Donald Trump revealed a mandate imposing a 25% tariff on vehicles “not made in the U.S.,” sparking widespread concern among global automakers.
In the days following the announcement, shares in Toyota plummeted by 9.4%, while Nissan and South Korea’s Hyundai dropped 9.3% and 11.2%, respectively. The impact seems to be particularly severe on Japanese automakers, with Toyota poised to experience the most detrimental effects due to its substantial sales figures in the U.S. market, as noted by Vivek Vaidya, global client leader for mobility at Frost & Sullivan.
Insights from car marketplace Carpro reveal that Asian manufacturers comprised six of the top eight automakers in the U.S. by sales volume in 2024. Toyota led the pack with 1.98 million vehicles sold, surpassing American giants Ford and Chevrolet. Honda and Nissan secured the fourth and fifth spots, respectively, while South Korean brands Hyundai and Kia followed closely. Subaru rounded out the list at eighth place.
A closer look at the financial reports from these manufacturers indicates that a substantial portion of their revenue is derived from North America, making it unlikely they can easily absorb the repercussions of the tariffs.
Neither Toyota nor Nissan provided immediate statements on the situation when approached for comments by CNBC, and other manufacturers similarly remained silent.
The U.S. imported approximately $474 billion in automotive products in 2024, which included $220 billion in passenger vehicles, according to Reuters. A report from S&P Global Mobility dated March 27 highlighted that South Korea was the second largest automobile exporter to the U.S. last year, shipping 1.4 million vehicles, while Japan followed with 1.3 million.
“The USA is a crucial market for Asian automakers, and market leaders from Japan and Korea will face significant challenges as a result of this [tariff] announcement,” Vaidya stated.
Transitioning production to the U.S. in an effort to circumvent these tariffs is not a simple task, as noted by Joe McCabe, CEO of AutoForecast Solutions. He emphasized that the establishment of new factories entails substantial investment and time, making it an impractical solution for many makers.
Asset management expert Richard Kaye pointed out that while major players such as Toyota and Nissan possess extensive production facilities in the U.S., they would struggle to amplify operations sufficiently to counterbalance the tariff impacts. “The notion that they can eliminate reliance on Mexican and, to some extent, Canadian supply chains is implausible. They are likely to increase prices domestically due to tariffs, leading to tough decisions about passing costs to consumers,” he explained.
However, Kaye offered a contrasting perspective from Vaidya’s assessment, suggesting that Toyota, despite being the largest player, is relatively better positioned to cope with the tariffs. “Nonetheless, they cannot incur this impact without it affecting their bottom line significantly,” he remarked.
A potential silver lining in this tumultuous scenario is Suzuki, a Japanese automaker that does not sell vehicles in the U.S. Kaye highlighted that Suzuki’s shares have performed better than its competitors since the tariff announcement. As of the most recent reports, Suzuki has seen a year-to-date gain of over 1%, while Toyota and Nissan faced declines of 16.45% and nearly 21%, respectively. Hyundai and Kia are also grappling with losses around 7% and 8%. Kaye emphasized that Suzuki, focused on the Indian market, is uniquely insulated from the tariff implications, making it an outlier in this challenging landscape.
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