Asian automakers' stocks plummeted after Trump's tariff statements.

Shares of Japanese automakers and South Korean battery manufacturers fell on Tuesday following Donald Trump's statement about the possibility of imposing tariffs on Canada and Mexico soon, as well as the cancellation of the previous administration's electric vehicle executive order.

Chinese manufacturers diverged from the overall trend: their stocks opened higher as Trump did not mention China in his inaugural speech and did not immediately impose tariffs against Beijing, as he had previously promised, reports Economic Truth.

The fluctuations in Asian stocks following Trump's inauguration demonstrate how policy changes under his administration can impact major manufacturers among Washington's closest allies in the region, such as Japan and South Korea.

These countries are already facing challenges in transitioning to electric vehicles and fierce competition from rapidly growing Chinese competitors.

Trump hinted at the potential imposition of a 25% tariff on Canada and Mexico, which may take effect from February 1. This threat negatively impacts Asian manufacturers as Trump seeks to reduce the U.S. trade deficit.

This is particularly concerning for Mexico, which has long been a low-cost manufacturing center for automakers, including leading Asian companies.

Shares of Honda Motor, Japan's second-largest automaker, ended the day down 0.3% at 1478 yen after losing morning gains.

Honda ships 80% of its production made in Mexico to the U.S. market, and its chief operating officer Shinji Aoyama warned in November that the company would have to consider relocating production if the U.S. imposes permanent tariffs on imported vehicles.

Shares of Mazda Motor, which exported about 60% of approximately 209,000 cars produced at its plant in Guanajuato, Mexico, to the U.S. in 2024, fell 2.0% after Trump's statements.

A Mazda representative stated that the company would assess how potential tariffs would affect imports from Canada and Mexico.