The Deal That President Trump Reached With Japan Has US Automakers Worried

U.S. automakers are worried about a deal U.S. President Donald Trump struck with Japan to cap U.S. tariffs on Japanese vehicles at 15 percent because they say they will face higher U.S. tariffs than their competitors on the steel, aluminium, and parts they import to make the vehicles.

“We need to study the details of the deal, but this is a deal where Japanese cars without American parts will be subject to a lower tariff,” said Matt Blunt, president of the American Auto Policy Council, which represents the Big Three American manufacturers: General Motors, Ford, and Stellantis.

Blunt said in an interview that those companies and workers are “definitely worse off” because they face a 50 percent U.S. tariff on imported aluminium and steel and a 25 percent tariff on auto parts and finished cars, with some exceptions under the U.S.-Mexico-Canada agreement that took effect in 2020.

The backlash shows that Trump’s tariff policies risk serious damage to him in politically important states like Michigan and Wisconsin, where auto manufacturing is both a source of income and part of an identity.

Trump presented yesterday’s agreement with Japan as a great success that will create thousands of jobs in America and open up the Japanese economy in such a way as to reduce the persistent trade deficit with the USA. The agreement reduced the customs duty on Japanese cars from the threatened 25 percent to 15 percent, and it will come into effect on August 1. Japanese investments in American projects in the amount of 550 billion dollars are also foreseen.

In Japan, regulations preventing the sale of American vehicles will be removed, the White House announced, adding that it will be possible for Detroit-built vehicles to be shipped directly to Japan for sale.

But Blunt said foreign automakers, including American, European and South Korean, have only a six percent market share in Japan, casting doubt on the Trump administration’s assessment that merely opening the market there will be enough.

“It’s a tough nut to crack, and I’d be very surprised if we saw any significant penetration into the Japanese market,” Blunt said.

• Also See: Ford Anticipates That Trump’s Tariffs Will Cost It $1.5 Billion.