US President Donald Trump has announced steep tariffs on auto imports and parts, provoking threats of retaliation from trading partners ahead of further promised trade levies next week.
Wall Street slumped ahead of Trump's Wednesday afternoon announcement, while the world's top-selling automaker Toyota plunged more than three percent.
Japan's Prime Minister Shigeru Ishiba said Tokyo was "considering all kinds of countermeasures", while Canada's Mark Carney branded Trump's tariffs a "direct attack" on his country's workers.
Brazil's President Luiz Inacio Lula da Silva also said his country "cannot stand still" in response to the levies."What we're going to be doing is a 25 percent tariff on all cars that are not made in the United States," Trump said, as he signed the order in the Oval Office.
The duties take effect at 12:01 am (0401 GMT) on April 3 and impact foreign-made cars and light trucks.
Key automobile parts will also be hit within the month.
Trump responded by threatening Canada and the European Union with "large scale tariffs, far larger than currently planned" if they work together to cause "economic harm" to the United States.
Peter Navarro, Trump's senior counselor for trade and manufacturing, in a briefing after Trump's announcement blasted "foreign trade cheaters" who he said turned America's manufacturing sector into a "lower wage assembly operation for foreign parts."
He took aim at Germany and Japan for reserving the construction of higher-value parts to their countries.
But Washington's levies appeared to raise eyebrows close to home, including from Trump ally and Tesla boss Elon Musk, who said the cost impact on his firm's cars was "not trivial". "
To be clear, this will affect the price of parts in Tesla cars that come from other countries. The cost impact is not trivial," he posted on X.
The association of American Automakers said in a statement on Wednesday that Trump's tariffs must be implemented in a way that "avoids raising prices for consumers" and preserves the industry's competitiveness.
Since beginning his second term in January, Trump has imposed fresh tariffs on imports from major US trading partners Canada, Mexico and China -- alongside a 25 percent duty on steel and aluminum.
The latest levies will be in addition to those already in place for products. But the White House added that vehicles entering under the US-Mexico-Canada Agreement (USMCA) can qualify for a lower rate depending on their American content.
Similarly, USMCA-compliant auto parts will remain tariff-free as officials establish a process to target their non-US content.
In Japan, carmakers Nissan lost 2.5 percent, Honda shed 3.1 percent and Mitsubishi Motors gave up 4.5 percent, while Mazda and Subaru both gave up around six percent. South Korea's Hyundai retreated 2.7 percent in Seoul.
Trump has defended the levies as a way to raise government revenue and revitalize American industry.
But targeting imported cars could strain ties with close partners such as Japan, South Korea, Canada, Mexico and Germany.
"Imposing 25 percent tariffs on imported cars will have a devastating impact on many of our close trading partners," said Wendy Cutler, vice president at the Asia Society Policy Institute and a former US trade negotiator.
She added that Washington has free-trade agreements with some affected parties, "calling into question the value of US commitments" under a trade deal.
About 50 percent of cars sold in the United States are manufactured within the country.
Among imports, about half come from Mexico and Canada, with Japan, South Korea and Germany also being major suppliers.
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