In both Japan and South Korea, the tariffs recently announced by U.S. President Donald Trump have dealt a significant blow to the domestic car industries, which are not only crucial economic pillars but also sources of national pride in these countries.
The stock prices of major companies like Toyota, Honda, Hyundai Motor, and Kia Corp took a hit, collectively losing around $16.5 billion in value following Trump’s declaration of a 25% tariff on imported cars and light trucks set to be enforced on April 3.
People in Tokyo, Seoul, and Gwangju expressed concerns over the potential widespread repercussions of these tariffs, highlighting the pivotal role that the automotive sector has played in the post-war economic development of these U.S. allies.
While the automotive industry has been instrumental in revitalizing economies in countries like Germany, Italy, and France after World War Two, its impact in Asia, particularly in Japan and South Korea, has been even more significant. Automakers serve as the core of extensive networks of affiliated companies that influence nearly every aspect of daily work life in these nations.
In Japan, where the auto industry constitutes about 3% of the GDP, major automakers, notably Toyota, have often set the tone for national wage increases through annual negotiations between labor unions and management.
According to research by Teikoku Databank, the auto supply chain in Japan consisted of approximately 60,000 companies as of last year. The sector is responsible for employing over 5 million people, making up 8% of the total workforce, as reported by the Japan Automobile Manufacturers Association.
South Korea heavily relies on its car industry, which stands as its largest employer, with cars and automotive parts contributing to 14% of its exports, half of which are destined for the United States.
Many individuals, like Hiroshi Kojima, a 56-year-old businessman in central Tokyo, are worried that these tariffs could significantly impact the economy and production within Japan's manufacturing sector.
In Gwangju, South Korea, a Kia supplier voiced concerns about production levels and job security, particularly surrounding models like the Sportage, Soul, and Seltos crossovers exported to the U.S. While some factories plan to maintain Saturday shifts in April, uncertainties linger regarding demand.
General Motors’ plants in South Korea, which export over 80% of their vehicles, including models like the Chevrolet Trax and Trailblazer crossovers to the U.S., are expected to face heavier consequences compared to local competitors' facilities, which focus more on domestic sales.