Global Stocks Drop as Trump Announces New Auto Tariffs, China Defies the Trend
Global stock markets took a hit on Thursday following U.S. President Donald Trump’s announcement of new 25% tariffs on automotive imports, which negatively impacted major Asian markets. Japan’s Nikkei index fell by 1%, while South Korea’s KOSPI dropped by 1.3%. This move was seen as particularly damaging to European, Japanese, and South Korean automakers. Shares of major Japanese car manufacturers, including Toyota, Mazda, and Subaru, tumbled significantly, with losses exceeding 6%. European stock futures also pointed to a lower open, reflecting global concerns about the impact of these tariffs.
Trump’s announcement came alongside a statement that reciprocal tariffs would be “lenient,” particularly toward China. Trump hinted that China might see some tariff reductions if a deal could be struck regarding TikTok. Despite this, Chinese shares defied the downward trend, with the Shanghai Composite rising by 0.4% and Hong Kong’s Hang Seng index rallying by 1%. Analysts suggested that China’s automakers have limited exposure to the U.S. market, which could buffer the impact of the tariffs, and Trump’s focus on other markets might benefit China’s economic sentiment.
U.S. automakers, however, were hit hard after the bell. General Motors and Ford saw significant drops in their stock prices, losing over 5% and 6%, respectively. Wall Street futures initially pointed lower but later recouped some of their losses, with the tech-heavy Nasdaq also declining by more than 2% on Wednesday in anticipation of the tariff announcement. Analysts noted that while the timing of Trump’s move caught markets off guard, the details were expected and lessened the overall shock to investors.
In the broader financial markets, the U.S. dollar retreated from its three-week high, while gold prices rose by 0.5%, nearing a record high. Oil prices were marginally higher, with Brent crude up 0.1%. The uncertainty surrounding the tariffs and potential retaliations from countries like Japan, Canada, and the European Union added to the global economic instability, with analysts warning that the tariffs could stoke inflation in the U.S. and disrupt the Federal Reserve’s monetary policies.
source: reuters