Shares in Japanese, South Korean automakers surge on Tokyo trade deal
Shares of Toyota, the world's top automaker by sales, jumped 13 per cent while rival Honda advanced more than 9 per cent. The lower tariff - from 25 per cent previously - would ease the pain for Japan's most important industry in its most crucial market.
South Korean automakers gained on hopes Seoul would clinch a similar deal. Both Hyundai Motor and Kia rose more than 6 per cent.
The agreement with Japan, the world's fourth-largest economy and a pivotal US ally in Asia, is by far the most significant among several trade deals struck by the White House ahead of an Aug 1 deadline when higher levies are due to kick in.
While Trump did not give details on the auto portion of the deal in a post on his Truth Social platform, industry and government officials briefed on the agreement said it lowers the tariff to 15 per cent from 25 per cent on autos, which account for more than a quarter of Japan's exports to the US.
Still, it is unlikely to be all smooth sailing for Asian automakers.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
Sign Up
Sign Up
So far, tariffs from Canada and Mexico remain in place at 25 per cent. Mexico in particular is a key production hub for Japanese automakers, including Nissan, and also home to a Kia factory. Nissan shares were up almost 9 per cent.
News of Japan's trade deal is also likely to pile pressure on Seoul to come up with its own agreement ahead of the Aug 1 deadline.
Seoul is taking a close look at the US-Japan deal, South Korea's industry minister said. South Korea is a major competitor of Japan in areas such as autos and steel. It heads into high-level trade with the United States on Friday.
For both Japan and South Korea, the auto industry provides major exports, millions of manufacturing jobs and is a deep source of national pride.
Even with tariffs, the US remains by far the most important market for Toyota, Hyundai, Honda, Nissan and others. At Toyota and Hyundai alone, North America accounts for at least 40 per cent of the revenue, filings show.
The US is Toyota's biggest market in terms of vehicles. It sold 2.3 million vehicles there in 2024, including its Lexus brand, accounting for more than a fifth of its global total.
As a source of revenue, North America was second only to Japan in the last financial year. Meanwhile, Hyundai's North American revenue was the highest in almost a decade last year. REUTERS
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Straits Times
44 minutes ago
- Straits Times
US, China to resume tariff talks in effort to extend truce by 90 days
Find out what's new on ST website and app. US Treasury Secretary Scott Bessent and Chinese Vice-Premier He Lifeng will lead tariff talks on July 28, in Stockholm. STOCKHOLM – Senior US and Chinese negotiators will meet in Stockholm on July 28 to tackle longstanding economic disputes at the centre of the countries' trade war, aiming to extend a truce keeping sharply higher tariffs at bay. The South China Morning Post reported on July 27 that the two sides are expected to agree to extend the truce by three more months. China is facing an Aug 12 deadline to reach a durable tariff agreement with President Donald Trump's administration, after Beijing and Washington reached a preliminary deal in June to end weeks of escalating tit-for-tat tariffs. Without an agreement, global supply chains could face renewed turmoil from duties exceeding 100 per cent. The Stockholm talks, led by US Treasury Secretary Scott Bessent and Chinese Vice-Premier He Lifeng, take place a day after European Union chief Ursula von der Leyen meets Mr Trump at his golf course in Scotland to try to clinch a deal that would likely see a 15 per cent baseline tariff on most EU goods. Trade analysts on both sides of the Pacific say the discussions in the Swedish capital are unlikely to produce any breakthroughs but could prevent further escalation and help create conditions for Mr Trump and Chinese President Xi Jinping to meet later in 2025. Previous US-China trade talks in Geneva and London in May and June focused on bringing US and Chinese retaliatory tariffs down from triple-digit levels and restoring the flow of rare earth minerals halted by China and Nvidia H20 AI chips and other goods halted by the United States. Top stories Swipe. Select. Stay informed. Singapore Sewage shaft failure linked to sinkhole; PUB calling safety time-out on similar works islandwide Singapore Tanjong Katong Road sinkhole did not happen overnight: Experts Singapore Workers used nylon rope to rescue driver of car that fell into Tanjong Katong Road sinkhole Asia Singapore-only car washes will get business licences revoked, says Johor govt World Food airdropped into Gaza as Israel opens aid routes Sport Arsenal beat Newcastle in five-goal thriller to bring Singapore Festival of Football to a close Singapore Benchmark barrier: Six of her homeschooled kids had to retake the PSLE Asia S'porean trainee doctor in Melbourne arrested for allegedly filming colleagues in toilets since 2021 So far, the talks have not delved into broader economic issues. These include US complaints that China's state-led, export-driven model is flooding world markets with cheap goods, and Beijing's complaints that US national security export controls on tech goods seek to stunt Chinese growth. 'Stockholm will be the first meaningful round of US-China trade talks,' said Mr Bo Zhengyuan, Shanghai-based partner at China consultancy firm Plenum. Deals, deals, deals Mr Trump has been successful in pressuring some other trading partners, including Japan, Vietnam and the Philippines , into deals accepting higher US tariffs of 15 to 20 per cent. He said there was a 50-50 chance that the US and the 27-member European Union could also reach a framework trade pact, adding that Brussels wanted to 'make a deal very badly'. Two of Mr Trump's top trade officials, Commerce Secretary Howard Lutnick and US Trade Representative Jamieson Greer, will attend the Scotland talks and then travel to Stockholm. Analysts say the US-China negotiations are far more complex and will require more time. China's grip on the global market for rare earth minerals and magnets, used in everything from military hardware to car windshield wiper motors, has proved to be an effective leverage point on US industries. Trump-Xi meeting? In the background of the talks is speculation about a possible meeting between Mr Trump and Mr Xi in late October. Mr Trump has said he will decide soon whether to visit China in a landmark trip to address trade and security tensions. A new flare-up of tariffs and export controls would likely derail any plans for a meeting with Mr Xi. 'The Stockholm meeting is an opportunity to start laying the groundwork for a Trump visit to China,' said Ms Wendy Cutler, vice-president at the Asia Society Policy Institute. Mr Bessent has already said he wants to work out an extension of the Aug 12 deadline to prevent tariffs snapping back to 145 per cent on the US side and 125 per cent on the Chinese side. Still, China will likely request a reduction of multi-layered US tariffs totaling 55 per cent on most goods and further easing of US high-tech export controls, analysts said. Beijing has argued that such purchases would help reduce the US trade deficit with China, which reached US$295.5 billion (S$379 billion) in 2024. China is currently facing a 20 per cent tariff related to the US fentanyl crisis, a 10 per cent reciprocal tariff, and 25 per cent duties on most industrial goods imposed during Mr Trump's first term. Mr Bessent has also said he would discuss with Mr He the need for China to rebalance its economy away from exports toward domestic consumer demand. The shift would require China to put an end to a protracted property crisis and boost social safety nets to encourage household spending. Mr Michael Froman, a former US trade representative during former president Barack Obama's administration, said such a shift has been a goal of US policymakers for two decades. 'Can we effectively use tariffs to get China to fundamentally change their economic strategy? That remains to be seen,' said Mr Froman, now president of the Council on Foreign Relations think-tank. REUTERS
Straits Times
2 hours ago
- Straits Times
US says tariff deadline of Aug 1 is firm, no extensions
Find out what's new on ST website and app. US Commerce Secretary Howard Lutnick says the US will no longer offer grace periods after Aug 1. WASHINGTON – The US deadline of Aug 1 for imposing tariffs on its trading partners is firm and there will be no extensions, Commerce Secretary Howard Lutnick said on July 27. 'So, no extensions, no more grace periods. Aug 1, the tariffs are set. They'll go into place. Customs will start collecting the money, and off we go,' Mr Lutnick told Fox News on Sunday. After the levies kick in, President Donald Trump – who was negotiating on July 27 in Scotland with European Union officials – is still willing to keep talking, Mr Lutnick said. Of the Europeans, he said, 'you know they're hoping they make a deal, and it's up to President Trump, who's the leader of this negotiating table. We set the table'. So far, five countries have struck deals with the Trump administration ahead of the Aug 1 deadline as it tries to overhaul the global system of largely free trade by slapping tariffs on countries that the United States deems as engaging in unfair practices. These five are Britain, Vietnam, Indonesia, the Philippines and Japan. The levies they accepted are often higher than the new base rate of 10 per cent that the US has applied to most countries since April. Top stories Swipe. Select. Stay informed. Singapore Tanjong Katong Road sinkhole did not happen overnight: Experts Singapore Workers used nylon rope to rescue driver of car that fell into Tanjong Katong Road sinkhole Singapore Car that fell into Tanjong Katong Road South sinkhole removed; road remains closed for repairs Asia Singapore-only car washes will get business licences revoked, says Johor govt Sport Arsenal beat Newcastle in five-goal thriller to bring Singapore Festival of Football to a close Singapore Benchmark barrier: Six of her homeschooled kids had to retake the PSLE Singapore Younger generation must inherit and strengthen Singapore's multiculturalism: David Neo Asia S'porean trainee doctor in Melbourne arrested for allegedly filming colleagues in toilets since 2021 But they are far below the levels the Trump administration threatened to impose if no deal were reached. AFP
Business Times
2 hours ago
- Business Times
US says tariff deadline of Aug 1 is firm, no extensions
[WASHINGTON] The US deadline of August one for imposing tariffs on its trading partners is firm and there will be no extensions, Commerce Secretary Howard Lutnick said on Sunday (Jul 27). 'So no extensions, no more grace periods. August 1, the tariffs are set. They'll go into place. Customs will start collecting the money, and off we go,' Lutnick told Fox News Sunday. After the levies kick in, President Donald Trump – who was negotiating Sunday in Scotland with European Union officials – is still willing to keep talking, Lutnick said. Of the Europeans, Lutnick said, 'You know they're hoping they make a deal, and it's up to President Trump, who's the leader of this negotiating table. We set the table.' So far five countries have struck deals with the Trump administration ahead of the Friday deadline as it tries to overhaul the global system of largely free trade by slapping tariffs on countries that the US deems as engaging in unfair practices. These five are Britain, Vietnam, Indonesia the Philippines, and Japan. The levies they accepted are often higher than the new base rate of 10 per cent that the US has applied to most countries since April. But they are far below the levels the Trump administration threatened to impose if no deal were reached. AFP
