Japan auto exports to US dive as tariffs bite
Japanese auto exports to the United States tumbled more than a quarter in June, official data showed Thursday, amid growing concern at the failure of Tokyo to strike a deal to avoid the worst of Donald Trump's tariffs. Roughly eight percent of jobs are tied to the auto industry in Japan, which is home to the world's top-selling carmaker Toyota as well as Honda, Nissan and other giants. The government is seeking relief from 25 percent US vehicle tariffs and other trade levies due to come into force on August 1, but no agreement has been reached despite several rounds of talks. Japan posted a trade surplus in the three months in June, with exports exceeding the value of imports by 153.1 billion yen ($1.0 billion).
Exports to the United States fell 11.4 percent on-year to 1.7 trillion yen, with autos down 26.7 percent, finance ministry data showed. Shipments of pharmaceutical drugs and auto parts also contributed to the decline, the ministry said. Japan's trade surplus with the United States shrank 22.9 percent year-on-year in June - the second straight monthly contraction, even as imports from the country slipped 2.0 percent. Japan, a key US ally and its biggest investor, is subject to the same 10 percent baseline tariffs imposed on most nations.
Trump also announced an additional 24 percent 'reciprocal' toll on Japan in early April but later paused it along with similar measures on other countries. But earlier this month he informed a number of trading partners of new country-specific rates, hitting Japan with a 25-percent tax.
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He not only continued to insist on the occupation of all of the southern and eastern Ukrainian regions he claims to have annexed, though never fully occupied, but added that Russia would need a 'buffer zone' in northern Ukraine as well. The change in Trump's approach has thus far had a muted impact for two reasons. Firstly, because his threat of the Russian oil tariff is not credible on its own. Trump has been extremely wary of high oil prices, or even the potential for them to rise. In the aftermath of his June strikes on Iran, he publicly decried the subsequent spike in oil markets. But it is also doubtful that the secondary tariff threat alone will work. Trump first used a similar threat to target Venezuelan oil exports at the end of March, and while Venezuelan exports declined, they have since recovered as Beijing has expanded purchases. 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New Delhi has gone from being a negligible purchaser of Russian oil before the full-scale invasion to its second-largest market, with 40 percent of India's imports now coming from Russia. India's Petroleum Minister Hardeep Singh Puri last week noted the country would not change its approach. He emphasised New Delhi has complied with previous restrictions, including the oil price cap, which the Biden administration engineered together with G7 allies in 2022 to actually keep Russian oil flowing, just limiting its revenues therefrom. They too were wary of market disruption, as Trump is today, with Biden's Treasury Secretary Janet Yellen even explicitly supporting the structure as a way to secure oil 'bargains' for India and other developing markets. But the minister did note that if there was an international agreement on shifting Russian oil purchases, then New Delhi could change its approach. If Trump wants his threats against Moscow to be credible, he will have to embrace a multilateral approach. Some steps are easy to do. As Trump's administration has thus far resisted additional sanctions, Brussels and Westminster have taken the lead in targeting Russia's 'shadow fleet' aimed at evading sanctions and the price cap, and engineering new sanctions proposals, including proposing tweaks to the oil price cap to lower it further when prices are soft. Two European Union sanctions packages have been agreed in the last six months, the second on July 18, and Trump should swiftly match their measures. If Europe can also be convinced to support a secondary tariff or other sanctions on Russian oil purchasers, that measure too would be far more likely to be effective. Additionally, Trump can target Russia's additional liquefied natural gas (LNG) exports by finally blacklisting Novatek, its key LNG exporter. Europe has not been willing to go that far yet, instead seeking only a phaseout of its purchases by the end of next year. But because the market for LNG tankers is much smaller than the oil market, earlier US sanctions on Russian LNG projects have proven much harder to evade. Russia's economy is finally struggling under the costs of Putin's war and all the sanctions he has brought upon his country in response to his aggression. Russian banks are reportedly holding preliminary discussions on the terms of state bailouts. But amid this pain, Russia claims to have seized a town in Ukraine's Dnipropetrovsk region for the first time – a claim Kyiv denies and which remains unverified. Trump can have a far more significant impact on the course of the war by reversing his resistance to Ukrainian attacks on the Kremlin's energy assets. Trump may have declared a new approach to Russia, but whether it goes beyond mere rhetoric will depend on his willingness to work with partners and allies and acknowledge the costs of such pressure. The views expressed in this article are the author's own and do not necessarily reflect Al Jazeera's editorial stance.
