Toyota, Mazda lead Japan auto shares lower on Trump tweet

Bloomberg

Japanese automakers’ biggest fears began to materialise with a single tweet from US President Donald Trump saying that he would impose a 5 percent tariff on goods from Mexico.
That’s because many of them build cars for export to the US in the country south of the American border. The shares of Japanese automakers, many of them already facing slowing sales in Europe and North America, fell in early trading in Tokyo.
Mazda Motor Corp, Nissan Motor Co and Honda Motor Co all import cars for sale in the US from Mexico. They ramped up vehicle production in Mexico in recent years, seeking to lower costs and establish a base to export to the US, as well as Central and South America, and even Europe.
“Tariffs will mean higher price tags on cars for sales in US and that will hit sales,” said Seiichi Miura, an analyst at Mitsubishi UFJ Morgan Stanley. “While the impact will differ for each carmaker, all of them have moved into Mexico.”
Mazda led declines, falling as much as 8.7 percent, the biggest intraday drop since November 2016. Toyota Motor Corp fell as much as 2.7 percent, and Nissan and Honda were down about 4 percent. South Korea’s Kia Motors Corp was also hit, with its stock sliding as much as 6.1 percent.
Representatives for Mazda, Nissan, Toyota and Honda said they couldn’t immediately provide a comment.
Mexico is the largest source of US auto imports. The country has become a major manufacturing base for most global car brands, including US ones, as assembly-line workers there earn about one-10th of what their US counterparts make. Trump has blamed low-cost Mexican production for the outsourcing of US manufacturing jobs south of the border.
Trump’s proposed tariff would take effect on June 10 “until such time as illegal migrants coming through Mexico, and into our country, STOP,” he said in a Twitter post on Thursday night.
He warned that the levy “would gradually increase until the illegal immigration problem is remedied at which time the tariff will be removed.”
Mazda has a factory in Mexico that made 183,266 cars in 2018. Nissan has three plants in the country with a combined capacity of 850,000 vehicles.