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Tokyo: Shares close lower after Trump announces Mexico tariffs
[TOKYO] Tokyo stocks closed lower Friday, after US President Donald Trump announced a 5 per cent tariff on all goods from Mexico, prompting the yen to strengthen against the dollar.
The benchmark Nikkei 225 index fell 1.63 per cent, or 341.34 points, to end at 20,601.19. It dropped 2.44 per cent over the week.
The Topix index was down 1.29 per cent, or 19.70 points, at 1,512.28. It fell 1.88 per cent over the week.
Mr Trump abruptly announced the tariff plan on Twitter, saying Washington would impose it from June 10 until "illegal migrants" stop coming through Mexico into the United States.
The move sent shares in Japanese carmakers with plants in Mexico down sharply, with Honda dropping 4.26 per cent to 2,651 yen, Mazda plummeting 7.13 per cent to 1,061.5 yen, Nissan down 5.31 per cent to 734.6 yen, and Toyota slipping 2.84 per cent to 6,384 yen.
Mr Trump said the tariffs "will gradually increase until the Illegal Immigration problem is remedied, at which time the Tariffs will be removed".
"Details from the White House to follow," he added.
Hiroaki Hiwata, strategist at Toyo Securities, said many Japanese carmakers would be negatively affected by the decision.
The dollar traded at 108.92 yen in Asian trade, against 109.61 yen in New York late on Thursday.
Mr Trump's move to impose a 5 per cent tariff would be "disastrous", Mexico's under-secretary for North American affairs at the Mexican foreign ministry said, vowing to retaliate.
The threat of the fresh tariff hike overwhelmed the positive impact on the Tokyo market of rallies on Wall Street, analysts said.
Shortly before the opening bell in Tokyo, Japan issued economic data including factory output which edged up 0.6 per cent in April month-on-month, after a 0.6 per cent dip in March.
The internal affairs ministry said the unemployment rate stood at 2.4 per cent, down 0.1 percentage point from the previous month, as the labour market in the country remains tight.