Asia and Europe are bracing for impact as the US administration’s 25% tariffs on imports of cars, light trucks, and auto parts are set to disrupt trade flows, mostly from key exporting countries like South Korea, Japan, and Germany.
The tariffs on cars and light trucks took effect from April 3, while duties on auto parts will be effective on May 3. However, the auto industry will not face additional tariffs announced by the US administration on April 2.
As vehicles and automotive parts are closely associated with steel and aluminum markets, the move is expected to add another layer of uncertainty as the US already has imposed 25% tariffs on all steel and aluminum imports, leading to retaliation by other countries.
South Korea’s Prime Minister Han Duck-soo said April 3 that his country will “quickly prepare emergency support measures” for industries and companies that will be affected by US tariffs on automobiles and other items.
In response to the April 2 tariff announcement by the US, China said it will take countermeasures to safeguard its own rights and interests, according to the spokesperson of the Ministry of Commerce.
Japan’s Prime Minister Shigeru Ishiba on March 27 said his government will put “all options on the table” in dealing with the US tariffs.
The European Automobile Manufacturers’ Association said the EU and the US must talk to find an immediate resolution to avert tariffs and the damaging consequences of a trade war that would not only negatively impact global automakers but US domestic manufacturing as well.
Asia
Japan shipped 1.4 million cars to the US in 2024 to become the third largest exporter to the US, according to US Department of Commerce data.
Japanese vehicle exports to the US were valued at Yen 6.03 trillion ($39.9 billion) in 2024, up 3.1% year over year, data from the Ministry of Finance showed.
South Korean vehicle exports to the US were valued at $40.01 billion in 2024, up 8.3% from 2023, data from the Ministry of Trade, Industry and Energy showed. Exports reached 1.5 million units in 2024, according to US Department of Commerce data.
China exported 106,592 units to the US in 2024, accounting for just 1.7% of China’s total vehicle exports, data from the US Department of Commerce showed.
Imports of China’s electric vehicles could face a steep rise in tariffs as the US already quadrupled tariffs on Chinese-origin EVs to 100% in September 2024, China-based sources said.
The US tariff hikes would intensify uncertainty in global trade markets, which could weaken China’s exports of manufactured goods, including vehicles, according to China-based steel market sources.
Europe
Tariffs on automobiles are likely to impact European steel producers and service centers linked to the auto industry, especially given the existing 25% tariffs on their products.
The auto industry is the second-largest consumer of steel, accounting for 17% of steel procurement in the EU.
Germany, the fifth-largest vehicle exporter to the US, shipped 446,556 cars to the US in 2024, making it the most-affected European country, followed by the UK and Slovakia.
Prices
Tariffs could potentially increase steel prices in the US due to reduced supply. Platts, part of S&P Global Commodity Insights, assessed the daily TSI US HRC index at $940/st on an ex-works basis on April 2, up 3% month over month.
European flat steel is likely to come under pressure as the US remains an important market.
Platts assessed HRC in Northwest Europe at Eur640/mt ex-works Ruhr April 2, up 4% month over month, while CRC prices in Northwest Europe were assessed up 3% month over month at Eur715/mt ex-works Ruhr.
HDG ex-works Ruhr prices were assessed at Eur725/mt April 2, with both HDG and CRC demand remaining poor amid weaker automotive and OEM purchasing and higher offers being reported.
China’s flat steel market, especially cold-rolled coil, is likely to be supported by robust vehicle manufacturing at least in the first half of 2025, led by domestic fiscal stimulus and a still-strong export market.
The average spread of Chinese domestic CRC prices to hot-rolled coil in Shanghai was Yuan 630/mt ($87/mt) on April 2, higher than Yuan 510/mt a year earlier, Platts data showed. The production cost to roll HRC into CRC is usually around Yuan 400-500/mt.
| Asia, Europe’s large presence in US as passenger vehicle exporters | |||||
| Countries | 2020 | 2021 | 2022 | 2023 | 2024 |
| Mexico | 21,86,483 | 21,34,494 | 22,80,577 | 26,44,089 | 29,61,598 |
| South Korea | 8,73,939 | 8,24,447 | 9,37,354 | 12,42,834 | 15,35,616 |
| Japan | 13,88,923 | 13,34,795 | 12,95,805 | 14,53,815 | 13,77,086 |
| Canada | 11,60,286 | 9,10,519 | 10,10,546 | 12,99,189 | 10,65,465 |
| Germany | 2,78,810 | 2,79,702 | 3,28,671 | 3,90,950 | 4,46,566 |
| China | 36,742 | 50,658 | 64,430 | 69,809 | 1,06,592 |
| United Kingdom | 1,34,081 | 1,29,584 | 81,510 | 73,705 | 96,451 |
| Slovakia | 68,424 | 61,340 | 71,640 | 99,575 | 93,301 |
| Sweden | 69,558 | 78,539 | 74,633 | 84,691 | 87,707 |
| Hungary | 36,629 | 36,981 | 36,381 | 48,482 | 53,828 |
| South Africa | 16,032 | 21,613 | 30,794 | 37,791 | 50,886 |
| Thailand | 19,866 | 20,557 | 19,508 | 17,833 | 35,615 |
| Belgium | 30,663 | 29,897 | 37,120 | 52,517 | 34,179 |
| Italy | 89,743 | 55,154 | 50,969 | 65,113 | 27,649 |
| Volume in units | |||||
| Source: US Department of Commerce, Bureau of the Census, Foreign Trade Division | |||||
Annalisa Villa | Jing Zhang | Market Specialist – Metals | Clement Choo | Lucy Tang | Market Specialist – Metals
