Shares in Japanese, South Korean carmakers jump on Tokyo trade deal
Shares of Toyota, the world's top carmaker by sales, jumped 13% while rival Honda advanced more than 9%. The lower tariff, from 25%, would ease the pain for Japan's most important industry in its most crucial market.
South Korean carmakers gained on hopes Seoul would clinch a similar deal. Hyundai Motor and Kia rose more than 6%.
The agreement with Japan, the world's fourth-largest economy and a pivotal US ally in Asia, is the most significant among several trade deals struck by the White House ahead of an August 1 deadline when higher levies are due to kick in.
While Trump did not give details on the car portion of the deal in a post on his Truth Social platform, industry and government officials briefed on the agreement said it lowers the tariff to 15% from 25% on cars, which account for more than a quarter of Japan's exports to the US.
However, it is unlikely to be all smooth sailing for Asian carmakers. Tariffs from Canada and Mexico remain in place at 25%. Mexico in particular is a key production hub for Japanese carmakers, including Nissan, and also home to a Kia factory. Nissan shares were up almost 9%.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Citizen
12 hours ago
- The Citizen
US tariffs: fragmentation and reshaping global supply chains and African MNEs
South Africa has reportedly reached an agreement with the US about tariffs, but government is keeping it under wraps until it is finalised. The US tariffs that will be implemented on Friday if countries do not make a deal with US president Donald Trump, will mark a fundamental economic shift towards fragmentation and reshape global supply chains and African Multinational Enterprises (MNEs). Arthur Kamp, chief economist at Sanlam Investments, warns that the sharp rise in US tariffs represents a significant shock to the system due to its stagflationary risks. 'You would expect higher inflation and lower growth in the US. After all, this is effectively a significant tax increase.' However, despite market calm, he cautions that from a macroeconomic perspective, the backdrop has worsened. The current US tariff for South Africa is 30%. Roy Mutooni, portfolio manager at Sanlam Investments, believes the initial market reaction may have been overly complacent. He explains that tariffs typically hurt companies in one of two ways: either manufacturers absorb the costs, which squeezes margins, or they pass them on to consumers, which dampens demand. 'It seems to me that the market's initial response was to derate – to reduce the value of future earnings. Then, as uncertainty grew, markets began assuming it would all be rolled back. That is the prevailing view now – that the full effect of the tariffs will not materialise,' Mutooni says. ALSO READ: US tariff of 30% on SA exports: where to now? US tariffs shock will likely affect margins and consumer demand However, he cautions that this represents 'very much the best-case scenario' and warns that the shock is likely to affect margins as well as consumer demand. Kamp's core observation is that the world is changing. 'We have come from an era of global integration, freer trade, low inflation and high growth. That is clearly changing with increasing protectionism, trade barriers, financial sanctions and a shift toward a more geo-economically fragmented world. 'We are moving into a more difficult environment for multinationals, with potential disruptions to capital flows already evident in some cases.' Mutooni adds that the traditional global trade model, with emerging markets supplying commodities to Asia and Asian economies exporting to the US consumer, is starting to break down. 'What the US is saying is: you will pay a toll or tax to access our consumer. And for the rest of us, there is no alternative.' This shift leaves investors needing to assess how companies will adapt, whether by finding new markets, changing business models, or investing in the US. 'Effectively, as an investor, you are still stock picking, but you must do it in the new context. 'Key questions include: how is the company dealing with the changed environment, how are its supply chains adapting, can its customer base handle the higher costs and are there new competitors emerging better able to navigate the changed circumstances, such as domestic producers or those from countries with lower tariffs and is management looking to new markets?' ALSO READ: Ordinary South Africans will feel impact of US tariffs Multinational enterprises will face complex questions under US tariffs, expert warns Michael Hewson, director at specialist African transfer pricing advisory firm Graphene Economics, says as Trump's second term seems set to be defined in part by a renewed surge of tariffs and trade protectionism, MNEs face complex questions about supply chains, profit allocations and the overall structuring of their global value chains. 'A key area under pressure is transfer pricing, the term for how multinational groups set the prices for transactions between related entities in different countries. These prices affect where profits are reported and in turn, how much tax is paid in each jurisdiction. 'While transfer pricing is usually a behind-the-scenes concern for finance and tax teams, it becomes highly strategic in times of global economic upheaval.' He says tariffs, which tend to be used to shield domestic industries from foreign competition, act as a tax on imports. 'Trump's focus on introducing new tariffs and his swift changes of direction regarding implementation triggered retaliatory actions from certain trade partners and injected fresh uncertainty into global markets. For African-based MNEs, or those routing goods through Africa to the USA, the impact could be substantial.' ALSO READ: 'Open our eyes and ears' – Ramaphosa on how to tackle US tariff hike on SA cars MNEs manufacturing in Africa will have to reconsider supply chains considering US tariffs Hewsom says MNEs manufacturing in Africa and then distributing into the US will need to consider their value chains. 'For example, imagine a South African company that manufactures automotive components and sells them to its sister company in the United States, which then sells the completed vehicles to American customers. The price at which the South African company sells the parts to its US counterpart is the 'transfer price'.' He points out that revenue authorities in South Africa and the US want to ensure that the price of these components reflects what independent businesses would charge each other, known as the arm's length principle. 'If the price is deemed not to be arms-length, one country might claim it is losing out on tax revenue, which can lead to audits, penalties, or even double taxation. If the US levies high tariffs on South African goods, including these car parts, the multinational group may need to ask whether it makes sense to continue manufacturing in South Africa, or to use one of the other plants in the world that may have lower duties imposed. 'Or it might ultimately decide it is better to build a plant in the USA. These decisions have potential tax consequences. For example, if the profitability of the South African entity reduces because production is shifted to another company within the group, it may be considered as a business restructuring for transfer pricing purposes.' ALSO READ: Devastating impact of US tariffs on SA automotive sector even before implementation US tariffs will affect MNEs on many levels Hewson says that when tariffs raise input costs or make cross-border goods less competitive, traditional intercompany pricing structures may no longer reflect economic reality. 'This affects MNEs on many levels, from shrinking margins to costly compliance breaches. However, the knock-on effects on African economies can also be substantial. 'The ripple effects of tariff-driven supply chain realignments and transfer pricing adjustments can be significant for African economies. If, for example, the car manufacturer decides to shut down its local car parts plant in favour of producing in a lower-tariff country or relocating operations to the US, this could lead to significant job losses in a country already grappling with high unemployment and widespread poverty,' he warns. 'Reduced industrial activity also means lower tax revenues for African governments and diminished demand for local suppliers and service providers. In economies where multinationals play a crucial role in employment and development, these decisions, while financially prudent from the MNE's global business perspective, can have negative local consequences.'
IOL News
13 hours ago
- IOL News
Small businesses warn of Trump tariff impact on toy industry at Comic-Con
Toy companies have been fretting about the impact of Trump's global tariff blitz on the industry, particularly when it comes to China. Image: Andrew Harnik / Getty Images North America / AFP Small business owners used the festive backdrop of Comic-Con on Thursday to discuss a sobering topic: the negative impact that US President Donald Trump's proposed tariffs are having on the toy industry. "Not the most sexy topic," Jonathan Cathey, chief executive of collectibles company The Loyal Subjects, admitted at a panel titled "Toys, Tariffs, and Trade Wars" at the four-day convention in San Diego, California. "But this ultimately affects you guys, it affects the end user," he said. "Prices will go up, and our rate of sales will go down." Toy companies have been fretting about the impact of Trump's global tariff blitz on the industry, particularly when it comes to China. Of over $17 billion worth of toys imported to the United States last year, more than $13 billion came from China. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ Ad loading But a rollercoaster tariff row between Washington and Beijing has caused havoc for US businesses and their Chinese suppliers. Panel moderator Daniel Pickett argued that the Trump administration is "imposing truly exaggerated, somewhat crazy, and frightening measures." He said Trump's proposal to impose additional tariffs on imports "has only wreaked havoc on the entire industry." Trump recently dismissed warnings by toy giant Hasbro's CEO Chris Cocks about rising prices if higher tariffs were imposed, defending his trade policy by emphasizing it favors domestic production. But Cathey argued the rhetoric doesn't reflect American reality. He said: "There's like 480,000 manufacturing jobs... that aren't even filled. So we're going to do what, we're going to bring a bunch of factory jobs back that nobody can fill." The business owner suggested that US value-addition lies in innovation rather than manufacturing. "There are industries where tariffs make sense," Cathey continued, highlighting the automotive and mining sectors. "There's a mechanism where tariffs make sense that actually protect jobs, American workers, and our national security. Barbie ain't it." Brian Flynn of Super7, a collectibles and action figures brand, said the Trump administration's shifting tariff policies have caused chaos and uncertainty. "Nobody knows what's going to happen," he said, adding that the triple-digit tariffs Trump has sometimes mentioned would "drive everyone out of the market." Flynn said the impact was already visible at Comic-Con, where he had to limit himself to a small concession stand rather than a larger exhibit space. Consumers will feel the impact in their wallets next quarter, he warned. "And when it hits, that's going to make a big difference for us." AFP
The Citizen
13 hours ago
- The Citizen
Weekly economic wrap: local politics and US tariffs coming next week
While inflation remained low in June, the picture can change from 1 August if the US tariff on South Africa remains at 30%. It was another busy week on the local political front, with a minister fired, while on the international front countries are waiting to see if US president Donald Trump will TACO (Trump Always Chickens Out) or stick to his guns and implement the tariffs he recently proposed. Lisette IJssel de Schepper, chief economist at the Bureau for Economic Research (BER) says while it was a big week on the local political front, there was some constructive momentum. President Cyril Ramaphosa dismissed higher education and training minister Nobuhle Nkabane who is facing accusations that she misled parliament. After Nkabane's dismissal, the DA agreed to support the departmental budget on higher education, essentially clearing the way for the Appropriation Bill to be passed. 'While this will not be the last test for the government of national unity (GNU), she says it is a welcome sign that Budget 3.0 can now be finalised, allowing attention to shift toward the October medium term budget policy statement (MTBPS),' De Schepper said. ALSO READ: 'Open our eyes and ears' – Ramaphosa on how to tackle US tariff hike on SA cars US tariffs: will Trump TACO? She said that ahead of next week's 1 August deadline, Trump announced another 'massive' trade deal. Japan and the US agreed on a 15% reciprocal tariff, rather than the 25% that Trump initially threatened. 'Reports suggest that the European Union and the US are nearing a deal, also for 15%, but this has not been confirmed. Unlike other nations or regions, the EU already announced that it has a retaliatory package ready to implement, if necessary, which puts the global economy at additional risk should negotiations fail. 'Trump has said that 15% will probably serve as a floor for reciprocal tariffs, which means the UK was 'lucky' to have been able to settle at 10% early on. In addition to Japan, a deal was reached with the Philippines, with tariffs at 19%, in line with Indonesia and just below Vietnam's 20%.' ALSO READ: JSE All Share Index hit 100k points Oil and gold lower as risk appetite increases Bianca Botes, Citadel Global director, commenting on commodities, says Brent crude breached $69/barrel as markets cheered progress on a US-EU trade agreement, anticipating that reduced tensions would spur global growth and oil demand. 'Supply-side forces further bolstered prices, including constrained Russian exports and tighter diesel markets due to new EU import restrictions and talks of sanctions on Russian oil. These factors offset demand concerns and underpinned the week's rally,' she said Botes saidgold hovered near $3 360 per ounce, consolidating earlier gains after a midweek pullback as risk appetite improved. 'Easing of global trade frictions and equity records prompted some investors to rotate out of safe haven assets, but gold still managed a 0.6% rise for the week, benefiting from lingering uncertainty around US Fed policy and geopolitics.' ALSO READ: Economists lower GDP growth forecast due to global and domestic risks Rand firmed against the dollar this week Turning to the rand, Botes says it firmed against the dollar, moving in tandem with rising JSE equities and elevated commodity prices. 'Steadiness in domestic bond yields, resilient mining sector profits and improved global risk appetite provided support for the currency, despite local growth and fiscal headwinds.' Busisiwe Nkonki and Isaac Matshego, economists at the Nedbank Group Economic Unit, said the rand gained strength on Wednesday, trading at R17.55/$ against the dollar, as inflation increased slightly, suggesting the Reserve Bank (Sarb) may proceed with further interest rate cuts. 'Renewed optimism on the GNU also supported the local unit. All parties in the GNU supported the 2025 Appropriation Bill, dampening earlier fears of a deadlock after the DA threatened to oppose the bill if the president did not act against a truant cabinet minister. 'However, the local unit surrendered some of the gains this morning to trade around R17.77/$ this afternoon.' ALSO READ: Inflation still low enough for repo rate cut, but only in September – economists Inflation edged up to 3% in June as expected Inflation edged up to 3% in June from 2.8% in May, driven by food and non-alcoholic beverages that increased by 5.1% and housing and utilities that increased by 4.4%. The increase in food inflation was mainly driven by an acceleration in meat prices (6.6%) amid supply chain issues due to avian flu and foot and mouth disease, Tshepiso Maroga, economist at the BER, says. Mamello Matikinca-Ngwenya, Siphamandla Mkhwanazi, Thanda Sithole and Koketso Mano, economists at FNB, say they see headline inflation rising to 3.6% in July, as utility and food costs ratchet up and fuel deflation moderates. For the year, they forecast average headline inflation of 3.5%. Nkonki and Matshego also said the increase was in line with their expectations. 'The food price increases were caused by temporary restrictions on poultry imports from Brazil due to avian flu, some tightening in local red meat supplies due to new outbreaks of foot-and-mouth disease and the lingering impact of earlier floods on vegetable and fruit supplies.'
