TARIFFS: US Auto Tariffs Impact Broad-Based Across Regions
US President Trump signed an order for 25% tariffs on imports of all non-US-made automotives including light trucks to come into effect on April 2. Parts have been delayed until May 3 at the latest. So far the response from Canada and the EU has been restrained with Canadian PM Carney saying that he should speak with Trump and EU President von der Leyen declaring negotiations will continue.
- In 2024, the US imported around half of the total autos sold with 32.2% of shipments coming from Mexico followed by 16.3% from Japan and 15% from Korea. Canada was fourth accounting for 12.8%.
- Europe was the fifth most important source of US car imports with 18.1% coming from the EU ex UK and 3.4% from the UK. Within Europe, Germany was the largest source at 10.2% of the total followed by Slovakia, Sweden and Italy with other countries less than 1%. Thus, the 25% import tax is going to be particularly harmful to the German auto sector. Auto manufacturing accounts for 6% of German GDP, according to Capital Economics.
US imports of personal vehicles & light trucks by country % total 2024
- Europe is not as impacted by tariffs on auto parts accounting for 11.9% of US imports in 2024 with Germany again the most affected.
- Given the high level of integration of the US auto manufacturing supply chain, NAFTA countries Mexico and Canada are the two largest individual suppliers of parts worth 41% and 10% of the total. If parts are USCMA compliant then they will be tariff free until the Secretary of Commerce determines how to apply tariffs to the “non-US content”.
- The impact on Asia is also more broad-based with 7 countries in the region accounting for more than 1% of US parts imports each. The largest are China (9.3%), Japan (8.0%) and Korea (6.4%) but ASEAN accounts for almost 7%.
US imports of auto parts by country % total 2024
Source: MNI - Market News/International Trade Administration
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
ASIA: Foreign Investors Dump Asian Equities
Decent outflows across the Asian region on Monday, South Korea & Taiwan were hit after the SOX sold off 3.3% on Friday, and has again sold off 2.60% overnight. India's outflows continued, and have now also erased the large inflow seen on Wednesday, while Indonesia saw its largest outflow since June 2024.
- South Korea: Recorded -$216m in outflows yesterday, bringing the 5-day total to -$433m. YTD flows remain negative at -$1.91b. The 5-day average is -$87m, slightly worse than the 20-day average of -$85m and the 100-day average of -$106m.
- Taiwan: Posted -$576m in outflows yesterday, bringing the 5-day total to -$338m. YTD flows remain negative at -$2.613b. The 5-day average is -$68m, worse than the 20-day average of -$4m but better than the 100-day average of -$65m.
- India: Recorded -$396m in outflows Friday, bringing the 5-day total to -$679m. YTD outflows remain heavy at -$11.538b. The 5-day average is -$136m, better than the 20-day average of -$236m and the 100-day average of -$240m.
- Indonesia: Posted -$213m in outflows yesterday, bringing the 5-day total to -$350m. YTD flows remain negative at -$931m. The 5-day average is -$70m, worse than the 20-day average of -$37m and the 100-day average of -$34m.
- Thailand: Saw -$41m in outflows yesterday, bringing the 5-day total to -$115m. YTD flows remain negative at -$266m. The 5-day average is -$23m, worse than the 20-day average of -$1m and the 100-day average of -$19m.
- Malaysia: Registered -$55m in outflows yesterday, bringing the 5-day total to -$139m. YTD flows are negative at -$968m. The 5-day average is -$28m, worse than the 20-day average of -$24m and in line with the 100-day average of -$28m.
- Philippines: Recorded -$11m in outflows yesterday, bringing the 5-day total to -$41m. YTD flows remain negative at -$187m. The 5-day average is -$8m, worse than the 20-day average of -$4m and the 100-day average of -$6m.
Table 1: EM Asia Equity Flows
FOREX: USD Edges Higher, USD/JPY Back At 150.00
The early skew for the USD is higher against G10 currencies, continuing late trends from Monday's US session, where Trump said tariffs were progressing/moving forward against Canada and Mexico. The USD BBDXY index was last up a touch to 1288.00.
- Losses are not much beyond 0.10% at this stage. AUD/USD is down 0.10% to 0.6340/45, while NZD/USD is back under 0.5730. In Australia a weekly consumer sentiment reading (from ANZ) bounced post the RBA cut last week, but spending intensions didn't rise much.
- USD/JPY is trending back above 150.00, up close to 0.20%. We had a few moments ago services PPI data, which printed in line with market forecasts.
- EUUR/USD was last near 1.0460, while USD/CAD was just above 1.4270.
- US equity futures have opened little changed after Monday cash losses. US cash Tsy trading has resumed with modest falls continuing in yield terms, but losses are less than 1bps at this stage. The Fed's Goolsbee stating the central bank is in wait and see mode what Trump actually delivers on trade/tariffs and its impact on inflation. Goolsbee added the central bank needs clarity before it can go back to cutting rates (per RTRS).
- The data calendar has some second tier Japan data later, while RBA Assistant Governor Jones is doing a Fireside chat.
JAPAN DATA: Services PPI Above 3% Y/Y, But M/M Falls
The Japan services PPI edged up to 3.1%y/y in Jan. This was in line with market forecasts and compares to the revised 3.0% gain from Dec (which was originally reported as a 2.9% rise). The m/m shift was -0.5%, after a flat outcome in Dec.
- The chart below plots this services PPI, which is the white line on the chart and reading to rhs, against headline CPI (reading to the lhs, the orange line).
- The services PPI is very close to recent cycle highs and consistent with elevated headline inflation pressures, even if m/m services PPI readings have lost some momentum in recent months.
Fig 1: Japan Services PPI Versus Headline CPI Y/Y
Source: MNI - Market News/Bloomberg
