Japan Raises Auto Tariff Issue With US as Trump Threatens Hike
Japan has raised concerns with the US about potential auto tariffs, which could have a significant impact on Japan's economy.
The country is closely watching the situation and will respond appropriately after examining the details of the measures and their impact on Japan.
Auto exports are a crucial component of Japan's economy, accounting for 17% of all outbound shipments in 2024, with over a third going to the US.
Japan has raised the issue of auto tariffs with the US after President Donald Trump threatened to impose a 25% levy on car imports, a move that would likely deliver a big blow to Japan’s economy.
Tokyo is closely watching any potential impact stemming from higher levies, which the president said might officially be unveiled as soon as April 2. Economists estimate the impact would be substantial given that cars make up the largest component of Japan’s exports, with the US as the No. 1 market.
“We have been raising the issue with the US government, given the importance of Japan’s automobile industry,” Japan’s Chief Cabinet Secretary Yoshimasa Hayashi said at a press conference on Wednesday. “Japan will first carefully examine the specific details of the measures that will come out and their impact on Japan, and then respond appropriately.”
Hayashi’s remarks come after Foreign Minister Takeshi Iwaya raised the issue with his counterpart Marco Rubio last week, when Tokyo also asked for exclusion from Trump’s reciprocal tariffs. The Asian nation is also seeking exclusion from his fresh tariffs on steel and aluminum.
It’s not clear if Japan is also seeking an exemption from the auto tariffs as Trade Minister Yoji Muto didn’t respond directly on Tuesday when asked about it. Japanese firms may also be hit by 25% tariffs on the chips and pharmaceutical sectors as well, though details are still scarce.
Read more about US tariffs, Japan’s economy:
Japan Raises Auto Tariff Issue With US as Trump Threatens Hike
Japan’s Economy Outperforms Forecasts, Keeping BOJ on Track
Japan Seeks Exemption From Trump’s Reciprocal Trade Tariffs
The impact from tariffs will be much bigger for Japan’s auto sector compared to other industries, and there is a good chance that Japanese cars will be targeted given Japan is among the top car exporters to the US, according to analyst estimates. Auto-related companies including material providers employ 5.58 million workers in Japan, or 8.3% of the country’s total workforce, according to the Japan Automobile Manufacturers Association.
In 2024, auto exports accounted for 17% of all outbound shipments for Japan, with more than a third of them going to the US.
Taking auto parts into account, car-related exports equated to a third of all shipments to the US. That played a big role in keeping Japan’s trade surplus with the US at a high level, a fact that risks Trump’s ire as the president aims to use tariffs to lessen the US’s trade deficits and pressure other nations to build factories in the US.
Still, Japan already makes more cars in the US than it exports, according to JAMA estimates. In 2023, Japanese carmakers made 3.3 million cars in America, more than twice the 1.5 million cars they exported to the country.
Source: Bloomberg
