Key Takeaways:

• Japanese automakers face sharp declines in stock prices following Trump's announcement of a 25% tariff on auto imports.
• Prime Minister Shigeru Ishiba vows to explore all options to counter the tariffs, calling them "extremely regrettable."
• Analysts predict a substantial hit to Japan's economy, with estimates of a 0.2% decrease in GDP due to the tariffs.

TOKYO: Shares in major Japanese car manufacturers dropped significantly after US President Donald Trump unveiled a 25% tariff on automobile imports set to take effect on April 3. Leading firms such as Toyota, Nissan, and Honda faced immediate stock declines, with Toyota's shares plummeting by 3.7% and Nissan by 3.2%. The tariff is part of a broader strategy by the Trump administration to boost domestic manufacturing while raising concerns over potential retaliatory measures from affected countries, particularly Japan and the European Union.

Japanese Prime Minister Shigeru Ishiba expressed that Japan, being the largest foreign investor in the US auto industry, finds the announcement "extremely regrettable." He emphasized the substantial investments and job creation made by Japan that could be jeopardized by these tariffs. Ishiba confirmed that Tokyo is considering "appropriate measures" in response to protect its economic interests.

The auto sector is a crucial pillar of the Japanese economy, accounting for approximately 10% of its total GDP and representing over 28% of exports to the United States in 2024. Analysts forecast that the impact of the tariffs could lead to significant economic repercussions, possibly resulting in a 0.2% decrease in Japan's GDP, according to Takahide Kiuchi, an executive economist at Nomura Research Institute. Furthermore, Masanori Katayama, head of the Japan Automobile Manufacturers Association, warned that tariffs would negatively affect the economies of both Japan and the US.

Global reactions have been swift, with various countries condemning the tariffs. In Canada, Prime Minister Mark Carney called the measures "a direct attack on our economy," proposing protective strategies for Canadian jobs. The European Union echoed similar sentiment, with President Ursula von der Leyen expressing deep regret and warning of escalating trade tensions. Amidst the turmoil, Trump defended the tariffs, asserting they would rejuvenate American factories while reducing reliance on foreign supply chains.

The upcoming tariffs have raised widespread uncertainty within the automotive industry globally, impacting everything from stock prices to international relations. The situation emphasizes the delicate balance in trade relations that continues to be strained under the current US administration's policies.

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