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Japanese automaker shares hit as Trump threatens Mexico with tariffs

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Toyota Motor Corp eased 2 per cent while Nissan Motor and Honda Motor fell about 3 per cent.

[TOKYO] Shares in Japan's major automakers sank on Friday after US President Donald Trump threatened to slap tariffs on Mexican imports next month, potentially affecting vehicles made in Mexico and sold north of the border.

Toyota Motor Corp eased 2 per cent while Nissan Motor and Honda Motor fell about 3 per cent. Mazda Motor took a bigger hit, tumbling nearly 7 per cent. All four automakers operate vehicle assembly plants in Mexico, producing roughly one-third of the vehicles made in the country.

Mr Trump said a tariff of 5 per cent would be imposed on all goods coming from Mexico until illegal immigration from that country stopped, increasing incrementally each month.

Honda declined to comment, while Toyota, Nissan, and Mazda were not immediately available for comment.

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Japan's top automakers and their suppliers, including Denso Corp and Aisin Seiko, for decades have been building vehicles in Mexico not only for the domestic market, but also to export to the United States, taking advantage of previous free-trade agreements between the two countries.

Nissan is the Japanese firm that produces the most vehicles in Mexico, and its exports to the United States account for roughly one-quarter of its total vehicle sales in the country, industry experts say. Its Sentra and Versa models are made in the country for the US market.

Smaller rival Mazda exports about 30 per cent of its Mexico-produced cars to the United States, while the figure for Toyota, which has been expanding production of pick-up trucks in the country, and Honda is less than 10 per cent each.

Japanese automakers together produced about 1.25 million vehicles in Mexico in 2018.

But production in Mexico is dwarfed by the number of cars they produce in the United States, their single largest market, where Japan's top three automakers alone produced roughly 4 million vehicles each year.

REUTERS