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Japan’s prime minister said “every option” was under consideration and South Korea promised an emergency response after Donald Trump stepped up his trade war by unveiling 25 per cent tariffs on car imports to the US.

Shigeru Ishiba’s comments in Japan’s parliament came after Trump’s latest trade salvo, which he said would go into effect on April 2. Washington is expected to apply a range of reciprocal tariffs against US partners and allies on the same day.

Asian carmakers are expected to be among the worst affected. Shares of Japanese automakers tumbled between 2 per cent and 5 per cent on Thursday, while those of South Korea’s largest carmakers Hyundai and its affiliate Kia dropped about 4 per cent.

“We need to think about the best option for Japan’s national interest,” said Ishiba. “We are considering every option in order to reach the most appropriate response.”

His comments came after European Commission president Ursula von der Leyen said the EU was also assessing its options.

Japan’s top spokesperson Yoshimasa Hayashi described the tariffs, which would hit an industry widely seen as the driving force of the economy, as “extremely regrettable”. He added that the Trump administration’s emerging trade policy could have a major impact on bilateral ties, the global economy and the multilateral trading system.

Ishiba’s February meeting with Trump in Washington had initially been hailed as a success for reasserting the strength of the US-Japan alliance.

But traders in Tokyo said the bluntness of Ishiba’s tone — along with the “every option” language — hinted at rising panic in Japan over the solidity of the relationship.

Japan has in recent weeks lobbied Washington for an exemption from tariffs, highlighting its status as the biggest supplier of foreign direct investment into the US.

The country’s economy and trade minister visited Washington this month, but the efforts have not secured the exemptions Japan had hoped for.

“Japan is the biggest investor into the United States, so we wonder if it makes sense for [the Trump administration] to apply uniform tariffs to all countries. That is a point we’ve been raising and will continue to do so,” said Ishiba.

Japanese carmakers have built significant production facilities in the US but their supply chains are heavily reliant on Canada and Mexico.

Japan is the largest exporter of finished vehicles to the US after Mexico, where Japanese companies are the dominant manufacturers. Japan sent $40bn worth of cars to the US in 2024, representing 28.3 per cent of its overall exports to the US.

Goldman Sachs analysts said the impact on Japanese exports could be “large” because cars and parts account for such a large proportion of exports to the US.

But they said the overall economic impact would be “somewhat limited” as Japan would not lose competitiveness against other car imports, estimating the hit to GDP at 0.1 percentage points.

Masanori Katayama, chair of the Japan Automobile Manufacturers Association, a lobby group, had previously warned that “significant production adjustment” would be required if US tariffs were introduced against vehicle imports from Japan, Mexico and Canada.

But Julie Boote, an analyst at Pelham Smithers, said tariff pressure could “ironically” force Japan’s fragmented carmaking industry to consolidate as smaller groups would need support.

South Korea’s industry minister Ahn Duk-geun said Korean carmakers would experience “considerable difficulties” due to the tariffs and promised to announce emergency measures next month, following a meeting on Thursday with industry executives.

Hyundai, whose $7.6bn hybrid and electric vehicle factory in Georgia began operations on Thursday, has also unveiled plans to expand US production capacity in anticipation of the Trump tariffs.

The carmaker on Tuesday announced $21bn of investment in the US, including a $5.8bn steel plant in Louisiana, as well as a target of producing 1.2mn vehicles annually in the country, up from 700,000 currently.