U.S. automakers find little to cheer in Japan trade deal
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U.S. automakers may not sell a lot of cars in Japan, even after a new trade pact between the two countries — but they're definitely worried about how the deal might disadvantage them at home.
Why it matters: President Trump's promise to strengthen the U.S. auto sector often runs counter to his trade and policy actions, leaving automakers feeling frustrated and confused.
Driving the news: The trade deal announced by the president includes a 15% "reciprocal" tariff on goods imported from Japan and $550 billion of Japanese investments in the U.S.
- "Perhaps most importantly," the president wrote on Truth Social, "Japan will open their Country to Trade including Cars and Trucks, Rice and certain other Agricultural Products, and other things."
Reality check: Unfair tariffs are not what has prevented U.S. automakers from selling more cars in Japan, says S&P Global Mobility analyst Stephanie Brinley.
- "Japan hasn't had a tariff on imported vehicles," she tells Axios. The bigger problem is that American automakers don't produce the small cars that Japanese consumers prefer.
- It's also a right-hand-drive market, which requires extra engineering. Safety and emissions standards are different in Japan, too.
In an interview with Bloomberg, Commerce Secretary Howard Lutnick said Japan will "take U.S. cars based on U.S. standards, so you don't have to make a different car" for the Japanese market.
- "You can take the car you make in Detroit, put it on a boat and send it," he said.
- But whether anyone in Tokyo will buy a Ford F-150 remains an open question.
Zoom in: In the U.S. market, the new 15% tariff rate on Japanese cars will be lowered from the 25% Trump imposed on all imported vehicles earlier this year.
- But it's sharply higher than the 2.5% that Japanese carmakers had been paying before Trump took office.
Between the lines: Trump has shifted trade war psychology, as Axios Macro authors Neil Irwin and Courtenay Brown noted.
- When a 25% tariff is on the table, striking a deal at 15% brings a collective sigh of relief to both investors and manufacturers.
- Japanese carmakers are signaling that they see it as a positive step that will remove uncertainty.
Yes, but: It's American carmakers who are most upset.
- "Any deal that charges a lower tariff for Japanese imports with virtually no U.S. content than the tariff imposed on North American-built vehicles with high U.S. content is a bad deal for U.S. industry and U.S. auto workers," said Matt Blunt, head of the American Automotive Policy Council, which represents General Motors, Ford and Stellantis.
What to watch: All automakers, including Japanese players, are anxious to see how the administration updates the U.S.-Mexico-Canada-Agreement.
- The administration is also negotiating deals with South Korea and the European Union that will be critical for automakers, not just for Korean or European brands.
- GM imported 419,000 vehicles from South Korea in 2024, including key models like the Chevrolet Trax and Trailblazer.
The bottom line: Trump's tariffs are a moving target, and automakers can only sit back and wait.
