Japanese rubber futures dropped as fresh US tariff plans on automobiles kindled fears of a trade war and outweighed the prospects of weaker supply from top producer Thailand.

The Osaka Exchange (OSE) rubber contract for July delivery ended daytime trade 5.1 yen lower, or 1.35%, at 371.5 yen ($2.45) per kg. The rubber contract on the Shanghai Futures Exchange (SHFE) for May delivery dipped 30 yuan, or 0.17%, to 17,805 yuan ($2,455.42) per metric ton. The most active February butadiene rubber contract on the SHFE fell 215 yuan, or 1.49%, to 14,185 yuan ($1,956.20) per ton. US President Donald Trump said on Friday that levies on automobiles would be start soon as April 2.

That could influence the intensity of auto manufacturing and, in turn, affect demand for rubber for tyres. Since his inauguration, Trump has imposed an additional 10% tariffs on all Chinese imports, set a March 12 start date for all steel and aluminium imports, and directed his economics team to devise plans for reciprocal tariffs.

Meanwhile, China President Xi Jinping spoke with technology entrepreneurs at a symposium that, Reuters reported, is aimed at encouraging executives to expand their businesses domestically and internationally amidst an intensifying Sino-US tech war. Chinese commodities data provider Longzhong Information said that overall raw material supply in overseas production areas has dropped, providing some support to rubber prices.

Meanwhile, Thailand's meteorological agency said farmers should prepare for crop damage from February 22-23 as the northeast monsoon strengthens.