U.S. automakers say Trump's 15% tariff deal with Japan puts them at a disadvantage
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'We need to review all the details of the agreement, but this is a deal that will charge lower tariffs on Japanese autos with no U.S. content,' said Matt Blunt, president of the American Automotive Policy Council, which represents the Big 3 American automakers, General Motors, Ford and Jeep-maker Stellantis.
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Blunt said in an interview the U.S. companies and workers 'definitely are at a disadvantage' because they face a 50 per cent tariff on steel and aluminum and a 25 per cent tariff on parts and finished vehicles, with some exceptions for products covered under the United States-Mexico-Canada Agreement that went into effect in 2020.
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The domestic automaker reaction reveals the challenge of enforcing policies across the world economy, showing that for all of Trump's promises there can be genuine tradeoffs from policy choices that risk serious blowback in politically important states such as Michigan and Wisconsin, where automaking is both a source of income and of identity.
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Trump portrayed the trade framework as a major win after announcing it on Tuesday, saying it would add hundreds of thousands of jobs to the U.S. economy and open the Japanese economy in ways that could close a persistent trade imbalance. The agreement includes a 15 per cent tariff that replaces the 25 per cent import tax the Republican president had threatened to charge starting on Aug. 1. Japan would also put together $550 billion to invest in U.S. projects, the White House said.
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The framework with Japan will remove regulations that prevent American vehicles from being sold in that country, the White House has said, adding that it would be possible for vehicles built in Detroit to be shipped directly to Japan and ready to be sold.
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But Blunt said that foreign auto producers, including the U.S., Europe and South Korea, have just a 6 per cent share in Japan, raising skepticism that simply having the open market that the Trump administration says will exist in that country will be sufficient.
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'Tough nut to crack, and I'd be very surprised if we see any meaningful market penetration in Japan,' Blunt said.
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Major Japanese automakers Toyota, Honda and Nissan did not immediately respond to a request for comment on the trade framework, nor did Autos Drive America or the Alliance for Automotive Innovation, organizations that also represent the industry.
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