When Trump took office, some Asian car and battery makers were hit by Reuters

By Hyunjo Jin and Daniel Lewsink

TOKYO/SEOUL (Reuters) – Japanese automakers and South Korean battery makers fell on Tuesday after U.S. President Donald Trump threatened to impose tariffs on Canada and Mexico soon and revoke the previous administration’s executive order on electric vehicles.

But Chinese manufacturers bucked the trend, with stocks opening after Trump did not target China in his inauguration speech or immediately impose tariffs on Beijing as promised.

Volatility in Asian stocks in the hours after Trump’s inauguration showed how policy changes under Trump could weigh on big producers in some of Washington’s closest allies, Japan and South Korea. Carmakers in both countries – and their suppliers – face disruption from the move to electric vehicles and intense competition from fast-growing Chinese rivals.

Trump has said he is considering imposing 25% tariffs on Canada and Mexico, and that the move could come as early as February 1. The threat of potential tariffs against the two countries hangs over Asian producers. Mexico in particular has been a low-cost manufacturing hub for automobiles, including Asian heavyweights.

“President Trump remains unrelenting in his intent to continue implementing additional tariffs across the board to address issues with other countries and reduce the U.S. trade deficit,” Takahide Kiuchi Institute, chief economist at Nomura Research, said in a note to clients.

Nissan (OTC: ) Motor, Japan’s third-largest automaker, erased most of its morning gains at 423.9 yen, rising to 437.8 yen in the morning session. Nissan has two plants in Mexico and produces the Sentra, Versa and Kicks models for the US market. It exports about 300,000 vehicles a year to the U.S., CEO Makoto Uchida said in November.

‘Great Threat’

Honda (NYSE: ) Motor exports 80% of its Mexican output to the U.S. market, and Chief Operating Officer Shinji Ayama warned in November that he might consider switching production if the U.S. imposes permanent tariffs on imported vehicles.

Honda shares reversed early gains at 1,483 yen. It rose as high as 1,526 yen at the open trade.

The Trump administration’s economic policies pose a major threat to the Japanese economy and Japanese companies. Additional tariffs and other measures by the US and a slowdown in global economies will further worsen Japan’s export environment.

Shares of South Korea’s Hyundai Motor ( OTC: ) were little changed. The automaker also operates in Mexico.

In a statement, it said manufacturing there is part of a long-term, global strategy and is committed to adapting operations to a global environment.

Shares of South Korean battery makers fell, with LG Energy Solution down 5% Samsung SDI (KS:) And SK Innovation (KS:) each lost more than 4%.

Trump in 2016 They repealed the 2021 executive order signed by President Joe Biden to ensure that half of all new vehicles sold in the United States are electric by 2021.

Japanese Finance Minister Katsunobu Kato said his country would respond “appropriately” after examining the new president’s policies.