By Peter Vercoe

Asian carmakers declined, led by Toyota Motor Corp., after US President Donald Trump signed an order to impose a 25% tariff on auto imports starting next week.

Toyota slumped as much as 4% in Tokyo trading on Thursday. Honda Motor Co. dropped as much as 3.4% and Nissan Motor Co. fell as much as 3.9%. Mazda Motor Corp. slid more than 6%, with automakers the worst performers on the Topix index.

Concerns over US tariffs have kept Japanese carmaker shares under pressure, with the Topix Transportation Equipment index underperforming the broader gauge this year. With automobile and auto parts forming Japan’s biggest export to the US, accounting for more than a third of total shipments, the tariffs have raised worries over the impact on the broader economy.

“It has become clear that Trump hasn’t changed his hardline stance on automobiles,” said Ikuo Mitsui, a fund manager at Aizawa Securities Co. “The tariff level is severe not only for Japanese manufacturers, but also for Korean manufacturers, which have a high proportion of exports to the US, and for Chinese manufacturers, which are facing headwinds due to US EV policy.”

South Korea’s Hyundai Motor Co., which earlier this week was praised by Trump for its plan to make a record $21 billion investment in the US — including a new steel plant and increased auto capacity — fell as much as 4% in Seoul trading. Kia Corp. declined 3%.

About 67% of Hyundai’s cars sold in the US were exported from South Korea while 45% of Kia’s cars were shipped from home, according to a note by Yong-kwon Moon, an analyst at Seoul-based Shinyoung Securities Co.

Read More: Car Prices Poised for $12,000 Surge on Trump’s New Tariffs

In Mumbai, shares of Jaguar Land Rover’s parent Tata Motors Ltd. slumped more than 6%, the biggest intraday decline in about two months. Auto component makers including Samvardhana Motherson International Ltd. and Sona BLW Precision Forgings Ltd. also saw their stocks slide at least 5%.

“Higher sales prices due to the tariffs will likely lead to a drop in car purchases in the US,” Mitsui said. “If we simply estimate the impact of the 25% tariff, we can expect a 30% decrease in operating profit for Toyota in the next fiscal year, and Mazda, which produces a lot of cars in Mexico, may even see losses,” he said.

Chinese automakers like BYD Co. are already effectively locked out of the US by a 100% tariff imposed by the previous Biden administration.

Speaking at the White House on Wednesday as he signed the proclamation, Trump said: “We’re going to charge countries for doing business in our country and taking our jobs, taking our wealth, taking a lot of things that they’ve been taking over the years.”

Trump said the tariffs would go into effect on April 2 and that the US would start to collect them a day later.

Goldman Sachs Group Inc. analysts estimated the tariffs could wipe ¥340 billion ($2.3 billion), or about 6%, from Toyota’s fiscal 2026 operating profit; ¥120 billion, or 8%, from Honda; and ¥110 billion, or 56%, from Nissan.

Read More: Trump Hits Auto Imports With 25% Tariff Starting Next Week

Shares of General Motors Co., Ford Motor Co. and Stellantis NV also dropped in US after-hours trading as Trump spoke.

“While some manufacturers have already announced plans to invest in the US and boost car production there, it’s not yet clear whether they will be given any favors regarding these new auto tariffs,” said Tim Waterer, chief market analyst at KCM Trade in Sydney. “And it’s not the work of a moment to shift car production from one country to the US.”

Asian automakers would also likely face opposition from domestic unions and lawmakers if they tried to shift too much manufacturing to the US.

“I’m not sure if Hyundai would really be able to increase annual capacity in the US by 1.2 million cars, as it would definitely face a protest from its Korean union,” said Shin Yoonchul, an analyst at Seoul-based Kiwoom Securities Co. “Even if they achieve 100% local manufacturing for US sales to avoid tariffs, it’s hard to say it is good for their earnings, because they can’t benefit from a weak Korean won by exporting vehicles from Korea.”

GM’s plants in South Korea will be also affected by the tariffs as the US carmaker exported about 500,000 vehicles from Korea in 2024, benefiting from the weak won.

— With assistance from Carmeli Argana, Heejin Kim, Toshiro Hasegawa, and Chiranjivi Chakraborty