U.S. auto tariffs: Measures are Unreasonable, Unacceptable

Editorial

15:47 JST, March 28, 2025

The high-tariff policy which the administration of U.S. President Donald Trump has been abusing has now extended even to automobiles, a key industry in major countries. This policy destabilizes the free trade system and will have a serious impact on the global economy. The Trump administration should quickly withdraw it.

Trump has announced that the United States will impose an additional 25% tariff on imported automobiles. This will result in a 27.5% tariff on passenger cars and a 50% tariff on trucks. All countries and regions, including Japan, are targeted. It will take effect on April 3 and will be a permanent measure.

Japan is one of the United States’ closest allies. Prime Minister Shigeru Ishiba met with Trump in February and confirmed their intention to cooperate across a wide range of fields to counter China, which has become a major military and economic power.

The high tariffs damage this relationship of trust and are utterly unacceptable. They also clearly violate the Japan-U.S. trade agreement that came into effect in 2020.

Automobiles account for about 30% of Japan’s exports to the United States, exceeding ¥6 trillion in value. If the tariff of 25% is simply passed on to the sale price, a ¥4 million car will become ¥5 million. This would reduce price competitiveness, which could significantly drag down sales and exports.

Japan’s automobile industry, including related companies, employs about 5.5 million people. If profits deteriorate, the impact on the Japanese economy will be enormous. The government should strongly request an exemption from the tariffs. It is also important to cooperate with the European Union and other countries to work toward the withdrawal of the measures.

Trump expressed his expectation that the high-tariff policy will bring production back to the United States and increase employment, saying, “This is the beginning of Liberation Day in America.”

The post-war global economy has developed through the promotion of a free-trade system led by the United States, which built an efficient supply chain through tariff reductions. The United States could end up destroying the very foundation of its own work.

The U.S. government cites security threats under Section 232 of the Trade Expansion Act as the basis for imposing tariffs. However, this argument lacks persuasiveness as the tariffs target many allies, including Japan.

In order to uphold the rule of law, Japan should consider filing a complaint with the World Trade Organization. Depending on how the situation develops, Japan should not hesitate to take countermeasures such as retaliatory tariffs.

It is also important to analyze the impact of the high tariffs and quickly take countermeasures.

Toyota Motor Corp. sold around 2.3 million vehicles in the United States in 2024, with just over 20% of these being exported from Japan. Local production in the United States accounts for half of this figure. Mazda Motor Corp. and Subaru Corp. have a high proportion of exports from Japan.

Automakers are urged to explore expanding production in the United States and reviewing their supply chains, taking into account their individual circumstances.

(From The Yomiuri Shimbun, March 28, 2025)