Shares of auto giants jump after US-Japan trade deal. Who's next?

Shares of major European and Asian automakers rose sharply after the U.S. and Japan agreed on a trade agreement. Among other things, it provides for a reduction in duties on car shipments to the U.S. market from 25% to 15%. Investors hope that this compromise will pave the way for similar deals with other exporters - including the European Union and South Korea.

Shares of Europe's largest automakers jumped on Wednesday, July 23, after the U.S. president announced a major trade deal with Japan. As part of the agreement, duties on Japanese cars and car parts will drop to 15 percent instead of the previous 25 percent that Trump imposed on all auto imports, reports CNBC.

Quotes of German automakers Volkswagen, BMW, Mercedes-Benz Group and Porsche rose by 5-7.5% on the news. Shares of Stellantis, which owns brands such as Jeep and Chrysler, rose by 7% on the Milan stock exchange and by almost as much in morning trading in New York.  

Japanese automakers also reacted with sharp growth: Mazda Motor shares soared by 18%, Toyota - by more than 14%,   Mitsubishi Motors - by 13%. Shares of Honda rose by more than 11%, while Nissan added over 8%;

Investors also actively supported South Korean companies Hyundai and Kia.

HSBC Bank called the reduction of U.S. duties on automotive products a "huge boon" for Japan, noting that the country seems to have been able to secure more favorable terms compared to the rest of Asia, CNBC reports. 

At the same time, Citi analyst Katsuhiko Aiba said the agreement between Washington and Tokyo could affect negotiations with other major auto exporters.  "It is noteworthy that automobile duties were reduced without imposing any restrictions on the volume of shipments against a country that is a major automobile exporter. This may affect negotiations with the EU and South Korea," he said in a research note.

The trade deal has given investors hope for a last-minute surge in agreements before the Aug. 1 deadline for Trump's deadline to expire and higher duties could take effect, Barron's agreed.

The automotive sector is considered particularly vulnerable to duties, especially given the highly globalized supply chains and heavy reliance on manufacturing facilities across North America, CNBC notes. For the Japanese economy, shipments of cars to the U.S. are key to the economy - last year they accounted for 28.3% of total exports. For European automakers, the U.S. market was the largest foreign market in 2024, accounting for 22% of all EU auto exports.

This article was AI-translated and verified by a human editor