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The new 25% tariff announced recently by US President Donald Trump has dealt a big blow to the Asian auto industry. This tariff will be applicable on all vehicles that are not manufactured in the US. This decision has affected car companies from Japan and South Korea the most, especially Toyota, which has the biggest hold in the US market.
According to Vivek Vaidya, Global Client Leader at Frost & Sullivan, CNBC said that Japanese companies are currently in trouble and Toyota may suffer the biggest loss. This company's most sales are in the US. After Trump's announcement, Toyota's shares have fallen by 9.4% in three days. Nissan shares fell by 9.3%, while South Korea's Hyundai fell by 11.2%.
Which companies dominate America?
According to a report by American car marketplace Corpo, 6 of the top 8 vehicles sold in the US in 2024 were from Asian companies. Toyota remained at number one, with 19.8 lakh vehicles sold. It also left behind local brands like Ford and Chevrolet. Honda and Nissan were at fourth and fifth positions, while Hyundai and Kia were at sixth and seventh positions. Subaru was at number eight. The
latest financial reports of these companies show that a large part of their revenue comes from North America. In such a situation, the shock of tariffs will not be easily managed. According to news agency Reuters, the US imported auto products worth a total of $474 billion in 2024, which included passenger cars worth $220 billion.
According to a report by S&P Global Mobility, the US got the most vehicles (2.5 million) from Mexico in 2024. South Korea was second in this list with 1.4 million vehicles. While Japan has captured the third position with 1.3 million vehicles. Will companies be able to reduce the impact of tariffs? Vivek Vaidya says that America is such a market for Asian car companies that it is impossible to replace it. Especially the leading companies of Japan and Korea will be very much affected by this tariff. According to Joe McCabe, CEO of AutoForecast Solutions, shifting production to America is not an easy task. Moving the factory is not a matter of a day, it will cost billions. Comgest's portfolio manager Richard Kay believes that Toyota and Nissan already have large production units in the US, but they are not enough to cover the entire impact of the tariff. According to Kay, removing supplies from Mexico and Canada is also not practical. In such a situation, the big question before these companies will be whether to bear the burden of increased prices themselves or pass it on to the customers. He believes that the companies will bear it themselves, which will be very difficult for them. However, Kay believes that Toyota is in a slightly better position than Frost & Sullivan because it is the market leader. But it too will not be able to completely escape the impact of the tariff. Will Suzuki benefit? If any company seems to be benefiting in this whole matter, then it is Suzuki. Suzuki does not sell vehicles in the US, so this tariff has no effect on it. Kay says that Suzuki actually focuses on India and this company seems to be the most stable in the Asian auto sector at the moment.
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