The U. S. Government on May 3 local time officially launched on the import of key auto parts 25% additional tariff measures. Japanese Prime Minister Shigeru Ishiba said Washington’s move to impose tariffs on imported auto parts was“Very regrettable” and that Japan would take all possible measures to respond. Ishiba has called the US tariffs a“National tragedy” and the us-dependent Japanese car industry is worried about Donald Trump’s trade wall. According to the NHK website, Shigeru Ishiba has been briefed by the Minister of economic regeneration, Ryoji Akazawa, on the second round of tariff negotiations between Japan and the United States, and plans to hold in mid-may for the next round of japan-us tariff negotiations to prepare. Facing the pressure at home and abroad, how Japan and the United States further game on the auto trade has aroused widespread concern.A transporter loaded with Mazda cars pulls out of a U. S. port.
“Japanese carmakers lose $1m an hour”
Despite calls at home and abroad to impose tariffs or disrupt supply chains and drive up auto prices, the U.S. government at the end of April granted a two-year tariff break on imported parts for automakers making cars in the United States, however, according to the“Nikkei” reported on May 4, the U. S. government’s tariffs will still impose a heavier cost burden on Japanese automakers. As pressure increases on component suppliers to raise prices, it is inevitable that prices will be passed on to finished cars. It is a major blow to Japanese carmakers, which have long had a global network of parts suppliers. According to the Japanese Ministry of Finance, 2024 exports of auto parts to the United States totaled 1.231 trillion yen (100 yen) , accounting for 5.8 percent of total exports, ranking second by category, second only to vehicle exports.
Some analysts believe that because the U. S. government’s latest tariff relief mechanism for a high proportion of production in the U. S. manufacturers, so the benefits of various Japanese automakers vary. According to Nomura, the 2024 share of Japanese brand sales in the US from January to October was about 70 per cent for Honda, the highest among Japanese carmakers, about 50 per cent for Toyota, about 20 per cent for Mazda and about 20 per cent for Honda Mitsubishi cars are not produced in the United States and therefore can not benefit from the tariff relief. But even if component makers do set up shop in the US, they will still face high labour costs and difficulties procuring raw materials, making it difficult to increase local capacity significantly in the short term. For many enterprises, in a short period of time to establish a local supply chain is not realistic.
According to Japanese auto industry statistics, about 30,000 parts are used to make a car, so Japanese auto parts companies’ supply chains span the globe. For example, Seiki, a large component maker based in Yokohama, had planned to scale back production in the US and shift some production to places such as Japan or Thailand. Now under the pressure of tariffs, continue to maintain the production system in the United States, but will also bear the corresponding pressure of higher local labor costs, there are no plans to expand production.
Many other parts makers said they would continue to monitor the Donald Trump administration’s tariffs. “If the US tariff policy continues, we will consider factoring the cost of tariffs into product prices and evaluating them based on various influencing factors,” Hiroichi Ito, president of Toyota’s Toyota Industries Division, said at an earnings briefing last month, while Lin Xinzhizhu, president of Denso, the world’s second-largest auto parts supplier, said recently that“The US tariff policy could have a huge impact on the entire auto industry and we have to respond. “The situation is unpredictable and needs to be highly sensitive.”
For now, most Japanese auto parts makers will base their strategies around the production plans of vehicle makers. However, easing the burden by cutting costs or passing tariffs on to prices is a challenging task.
At its earnings press conference on the 30 April, special ceramics, which makes engine parts, said that in its 2026 three-month outlook, the company expects the tariffs to reduce its main operating profit by about Y19BN. Future plans to pass through the price and production base adjustment and other measures, the reduction will be controlled within about 60 billion yen.
Earlier, Akazawa said in an interview with Tokyo Television and other Japanese media that a Japanese carmaker was“Losing $1m an hour” because of us tariffs. If the 25 per cent surcharge persists, it will put huge downward pressure on the Japanese economy. The burden of tariffs is expected to exceed y 1,000 bn, just to take Toyota, which sells more cars in the US. Other Japanese carmakers are also expected to suffer a y5 zero impact, with particular concern about the impact on companies such as Mazda, which is heavily dependent on the US market.
An American car dealer has put up“Duty Free” signs to attract buyers. (visual China)
The Japanese government is under intense pressure
The U. S. Market is one of the important export markets for Japanese automakers. About 1,497,800 new vehicles were sold in the US in the first quarter of 2025, up 4.5 per cent from a year earlier. In 2024 terms, Japanese car exports to the US are worth about $40bn, or about 28 per cent of the total. Japan’s auto industry chain is also under the pressure of U. S. trade policy, long-term investment in the United States.
In the 1970s and 1980s, when Japan’s economy and leading industries such as automobiles were rising and moving towards rapid development, toyota, Honda and other Japanese brands with fuel-efficient and low maintenance costs of the advantages of local brands in the United States to form a strong competition. In the face of US pressure, Japan controlled the number of cars it exported to the US from the early 1980s until the mid-1990s. Since then, Japanese car companies have entered the United States to invest in factories. Now, some voices in Japan are unhappy that trade talks with the United States could lead to a repeat of the capitulation of the auto industry to the United States.
Hokushin Kishi, a former minister of Economy, trade and industry and now an economist and professor at Keio University’s graduate school, expressed anger on May 4 in a television program about the progress of negotiations between Japan and the United States over tariffs, the second round of tariff talks, which focused on key industries such as cars, was deemed“Fruitless”. He said countries such as India and South Korea had already set the framework for US trade talks, while talks between Japan and the US had stalled. “The talks were so loose that the entire Japanese government’s response was too lax,” Kishi commented
Wang Jia, an assistant researcher with the Institute of Economics at the Shanghai Academy of Social Sciences, told a reporter from the global times on the 5th that the US tariff policy has put the Japanese government under tremendous pressure, chief among them are concerns about the auto industry and manufacturing in general. US demands that Japanese car companies shift production of core components to the US could hollow out Japan’s manufacturing base and accelerate the hollowing out of industry. Second, the tough stance of China and other countries in the dispute provides a sample and example for Japan to face the pressure from the United States, which is also a pressure for Japan to choose, as an active participant in the WTO, Japan wants to maintain its credibility in the negotiations. Making excessive concessions to the United States or accepting one-sided“Preferences” from the United States will damage Japan’s credibility in international trade.
According to a recent analysis by the Asahi Shimbun, Washington is pushing to narrow the trade deficit and weaken the strong dollar. Some believe that in this context, the United States in the trade negotiations aimed first at Japan, Japan and the United States will reach a similar 1985“Plaza Accord” between the new trade agreement.
But Daisuke Tang, chief market economist at Mizuho Bank, said in an interview that a“New plaza agreement” between Japan and the United States was impossible. The first is the huge increase in foreign exchange trading, and the second is that the Japanese economy is in a very different position now than it was when the Plaza Accord was signed. In the mid-1980s, Japan accounted for about 15 per cent of global GDP. In the 1980s, a Y 10,000 bn trade surplus was not uncommon, but today Japan accounts for only about 4 per cent of global GDP and runs a trade deficit.
No more advantages?
Japanese car brands have long been known in the U. S. market as“Reliable, durable and economical” and once held high-quality impressions in the minds of local consumers. However, as Korean brands such as Hyundai and Kia have rapidly improved in quality and design in recent years, and Tesla’s wave of electric cars has swept the market, the leading position of Japanese brands in the US market has been gradually squeezed. There have also been some recalls in recent years that have raised questions about the quality of Japanese cars. For example, some Toyota and Honda models have been recalled because of problems with electronic systems or brakes, and Nissan has faced numerous complaints about faulty transmissions, posing challenges to its brand image.
At the same time, more and more American consumers believe that Japanese cars in the interior design, vehicle system configuration is more conservative. In the face of the global auto industry to the trend of electric transformation, the response speed of Japanese car companies is relatively slow. Only in recent years have Toyota and Honda stepped up the introduction of all-electric models. By contrast, Tesla already has a commanding lead in the US electric car market, and US carmakers such as Ford and GM have stepped up their deployment. In the pure electric field, Japanese cars have a weak sense of market presence.
Wang Jia told the global times that Donald Trump is pressing the Japanese on trade issues, possibly due to the following considerations: first, the huge -JAPAN automobile trade deficit, the U.S. imports far more Japanese cars and parts than it exports, and even“American cars” assembled in the U.S. still rely on imported parts, donald Trump’s vision of“Made in America” is still far from being realized; Fourth, Trump hopes to encourage Japanese companies to set up more research and development centers and high-end manufacturing in the United States, such as key components in the automobile industry chain, so as to lock up technology and profits to return to the United States, ultimately giving US companies a competitive advantage.
Xiang Zhang, secretary-general of the International Intelligent Vehicle Technology Association, told the Global Times that Japanese cars, which still stick to traditional fuel vehicle technology in the era of new energy vehicles, face the challenge of component tariffs, that is a Remove the firewood from under the pot blow, which is why the Japanese government has been cautious in the trade talks. “The US market is vital to the development of the Japanese car companies and if the US raises tariffs, it would be a disaster for them,” Xiang Zhang told reporters, global sales of Japanese cars are largely driven by traditional petrol cars. U. S. tariffs will greatly hurt the competitiveness of Japanese cars in the U. S. market, to a number of Japanese car companies brought very great harm, and then affect the overall economy of Japan.
Global carmakers are worried about the Yahoo! Japan of the car industry and the impact of tariffs is hitting the North n car market, Caijing reported on the 4 May. Against this backdrop, the progress of China’s car companies is also putting pressure on Japan’s. The battle between Japan and the US over car tariffs comes as Chinese carmakers continue to challenge Japanese rivals for international market share. While the US has all but shut down the market for Chinese cars, Chinese carmakers are expanding sales of cost-effective electric vehicles on the global market. Jády’s global sales rose 59.8% in the first quarter from a year earlier.