Japan sees mixed impact as US lowers auto tariffs to 15%

The United States cut tariffs on Japanese automobiles from 27.5 per cent to 15 per cent on September 16, but automakers are bracing for a significant financial hit estimated at more than 2.6 trillion yen ($17.71 billion).

The new rate, while lower, remains six times higher than the pre-Trump level, posing a substantial burden on the industry despite the Japanese government’s optimistic framing, Caliber.Az reports via foreign media. 

“Initially, we were told that the United States would never accept our request to lower automobile tariffs,” Ryosei Akazawa, minister in charge of economic revitalisation who led tariff negotiations with the Trump administration, said at a news conference. “As the government, we welcome this as the steady implementation of the Japan-US agreement.”

Under normal circumstances, the US tariff on imported automobiles is 2.5 per cent. In April, President Donald Trump imposed an additional 25 per cent, raising the total to 27.5 per cent. Tokyo and Washington agreed in July to reduce the tariff to 15 per cent.

Seven major Japanese automakers, including Toyota Motor Corp., have projected that the higher US tariff would cut their combined operating profits for the fiscal year ending March by more than 2.6 trillion yen.

Although US sales remain solid for now, manufacturers are boosting production at domestic factories and reviewing vehicle lineups to mitigate the impact. Companies remain hesitant to raise prices to pass on the tariff, suggesting that the negative effects will ripple across the industry, including parts suppliers.

Masanori Katayama, chairman of the Japan Automobile Manufacturers Association, who was briefed by Prime Minister Shigeru Ishiba on July 31, said, “We highly appreciate the fact that an agreement was reached,” but emphasised that 15 per cent “is not a small figure.” He added, “We hope the government will implement various next-best measures going forward.”

The measures sought by the industry are expected to include policies to support domestic vehicle sales, particularly a fundamental overhaul of the auto-related tax system.

Currently, taxes are levied on vehicle purchases, ownership, and fuel. The industry argues that the burden on users is heavier than in other countries and has long called for the abolition or reconfiguration of certain taxes.

“We have been requesting many of these measures for some time,” a representative for a major automaker said. “But we believe that this year presents an opportunity to finally make them a reality given how hard the industry has been hit by the tariff.”

By Sabina Mammadli