US President Donald Trump’s announcement of a 25% tariff on all vehicles imported into the US could have far-reaching consequences for Japan’s economy and auto industry, with the Japanese government facing a significant challenge in convincing Washington to exempt Japanese car makers from the levy.
The Japanese government is facing a significant challenge as US President Donald Trump has announced plans to impose a 25% tariff on all vehicles imported into the US, effective April 23. This move could have far-reaching consequences for Japan’s economy and auto industry.
Donald Trump is a businessman, television personality, and politician.
Born on June 14, 1946, in Queens, New York, he graduated from the University of Pennsylvania with a degree in economics.
Trump's business career began in real estate development, building his company into one of the largest in the world.
He hosted 'The Apprentice' reality TV show from 2004 to 2015 and entered politics, becoming the 45th President of the United States in 2017.
Trump served a single term before losing the 2020 presidential election to Joe Biden.
The Impact on Japan’s Economy
Prime Minister Shigeru Ishiba has called on Washington to exempt Japanese car makers from the levy, which would come on top of the existing 2.5% duty. If Tokyo fails to convince Trump to reduce his demands, car manufacturers and the broader Japanese economy could feel the pain. According to Martin Schulz, chief policy economist for Fujitsu‘s Global Market Intelligence Unit, the overall impact on business in Japan will be serious.
‘Almost one-third of Japan’s exports are autos or in related sectors, and they account for 8% of overall employment here,’ Schulz said. ‘The tariffs are poised to shrink the Japanese economy by 0.2%. When prices go up by more than a quarter because of these tariffs, the question becomes who will swallow those added costs.’
Martin Schulz is a German politician who served as the President of the European Parliament from 2012 to 2017.
Born on December 20, 1955, in Siegen, West Germany, Schulz was a member of the Social Democratic Party (SPD).
He held various positions within the European Parliament, including First Vice-President and Group Leader of the PES group.
Schulz's tenure as President focused on strengthening EU democracy and addressing economic challenges.
Tariffs Tangle Supply Chains
Japanese companies that invested heavily in production facilities in Mexico and Canada on the understanding that cross-border trade with the US would remain unimpeded have been caught out by the increasingly protectionist position of the second Trump presidency. The imposition of tariffs on components imported multiple times as part of the manufacturing process adds complexity to the situation.
Japan’s Position
The Japanese government has expressed its dismay at the announcement and urged the US government to exclude Japan from the scope of the measure. Yoshimasa Hayashi, chief cabinet secretary, stated that ‘Japan has made significant investments and significant job-creation, which does not apply to all countries.’ However, it remains uncertain whether Tokyo will be able to convince Trump to recognize Japan as a special case.
Global Implications
Analysts point out that the tariffs will not only affect Japanese companies but also have a broader impact on the global economy. Takaki Nakanishi, CEO of the Tokyo-based Nakanishi Research Institute and a specialist in the auto sector, noted that since the tariffs are the same for all imported vehicles, the impact will be felt worldwide.
‘The biggest loser will be the US consumer and the US economy,’ Nakanishi said. ‘Of course, the biggest loser will be the US consumer and the US economy, although I imagine Trump supporters will not really understand what is happening until there are more economic problems, such as prices rising or damage to the stock market.’
Despite the challenges ahead, Nakanishi remains optimistic that Japan has room to negotiate with Trump. ‘It is very hard to say what is going to happen because the president changes his mind easily,’ he said. _’In my view, the disagreement is much stronger with Europe because governments there are considering reciprocal tariffs. That could work out to be an opportunity for Japan.’
