The proposed tariffs by Trump on imported vehicles could significantly impact Japanese automakers, such as Nissan, Toyota, Honda, and Mazda, which produce many vehicles in Mexico for the U.S. market. Companies are reacting by strategizing to mitigate effects, while the Japanese government is preparing to assist impacted industries. Economists warn of broader economic repercussions from these tariffs, highlighting the importance of negotiations for exemptions.
The potential impact of Trump’s tariffs on Japanese automakers could be significant given the presence of major companies such as Nissan, Toyota, Mazda, and Honda in Mexico, where they produce a large volume of cars for U.S. export. For instance, Nissan manufactured over 615,000 vehicles in 2023, exporting about 40 percent to the U.S. Similarly, Toyota produced around 250,000 cars, with 90 percent earmarked for the U.S. market, while Mazda exported half of its 202,000 units and Honda sent 80 percent of its more than 167,000 vehicles across the border. Additionally, Toyota and Honda’s factories in Canada may also be adversely affected by the proposed tariffs.
In response to these looming tariffs, Honda has initiated measures to transport as many vehicles as possible into the U.S. before the tariffs take effect and is currently assessing how much of a price increase consumers might tolerate. Moreover, Honda is reviewing its production strategies and export markets to adapt to the changing circumstances. Meanwhile, the Japanese chemical firm Asahi Kasei is collaborating with Honda to establish a factory in Ontario, Canada, to produce electric vehicle battery parts, indicating a shift towards local production due to tariff concerns.
Former President Trump has previously suggested the possibility of extending tariffs to cover automobile imports from other nations, heightening uncertainty for the Japanese auto industry. Automobiles represent over a quarter of Japan’s exports to the U.S., valued last year at over 6 trillion yen (approximately $40 billion). Currently, a 2.5 percent tariff exists on imported vehicles, but a potential increase to 25 percent could profoundly affect automotive manufacturers and their supply chain partners.
The Japan Automobile Manufacturers Association Chairman, Katayama Masanori, has been active in lobbying against the proposed tariffs, expressing that they would negatively impact both Japanese and U.S. economies. He hopes for Japan’s government to effectively negotiate exemptions from these tariffs. Concerns extend beyond major manufacturers, as small and medium-sized suppliers of parts and industries supplying essential materials may also experience significant effects due to heightened tariffs.
Economist Kobayashi Shinichiro from Mitsubishi UFJ Research and Consulting emphasizes the broader economic implications of this situation, cautioning that aggressive U.S. trade policies could dampen demand for automobiles, hampering both nations’ economies. He urges the Japanese government to communicate the adverse effects of such tariffs to the U.S., asserting that the repercussions could extend to various sectors beyond just automotive.
In response to the escalating situation, the Japanese government has established a team to provide assistance and gather information from affected industries, addressing approximately 200 inquiries from businesses across the auto, steel, and aluminum sectors. Such proactive measures underscore the significant concern regarding the prospective tariffs and their implications for Japan’s economy.
In summary, the threatened tariffs by the Trump administration pose a substantial risk to Japanese automakers, potentially disrupting their production and export capabilities. Major firms such as Nissan, Toyota, Mazda, and Honda, are already strategizing to mitigate the impact, with some considering shifts in production and export dynamics. The Japanese government is likewise taking steps to support affected companies and negotiate tariff exemptions to safeguard economic interests. Nonetheless, concerns remain regarding the broader implications for both economies if tariffs are escalated.
Original Source: www3.nhk.or.jp
