Ishiba Says Japan Won't Rule Out Countermeasures on Car Tariffs

Yahoo

27-03-2025

(Bloomberg) -- Japanese Prime Minister Shigeru Ishiba said he won't rule out countermeasures against the Trump administration's 25% tariff on US car imports.
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'We must consider appropriate responses and naturally, all options are on the table,' Ishiba said Thursday in parliament. 'The bottom line is that we must consider what will best serve the national interests of Japan.'
Ishiba spoke after US President Donald Trump announced the fresh tariff will go into effect on April 2 for all cars that are not made in the US. The levies will hit Tokyo despite repeated in-person pleas by Japanese ministers for an exemption and a summit in February in which Ishiba promised to buy more US liquefied natural gas and boost Japan's investment into the US to $1 trillion.
'We invest in the US, we provide employment, and we pay the highest wages. We are the largest investor in the US,' Ishiba said. 'We must clearly state that it is not right to treat all countries in the same way.'
The tariffs will likely deliver only a small blow to Japan's economy partly because the Asian nation's automakers will retain relative competitiveness, given that the measure will apply to all nations, according to Goldman Sachs.
The auto sector is a key pillar of Japan's economy and its trade with the US. Last year car and car parts accounted for a little over one-third of Japan's exports to the US, its biggest export destination. Auto-related companies including material providers employ 5.58 million people in the country, or 8.3% of the total workforce, according to the Japan Automobile Manufacturers Association.
Still, analysts expect any impact on the nation's gross domestic product to be relatively minor.
Goldman Sachs expects the auto tariffs to shave only a little over 0.1 percentage point off Japan's GDP growth rate, analysts Tomohiro Ota, Akira Otani and Yuriko Tanaka wrote in a report.
Kenichi Kawasaki, a professor at the National Graduate Institute for Policy Studies, estimates the tariffs are likely to cut car production in Japan by 5.8%. Still, Kawasaki, the former Cabinet Office director for the economic outlook, also forecasts that auto production in Canada and Mexico would fall by 26.6% and 20.3% respectively, adding to the pain of Japanese automakers that make cars in those nations.
Shares of Japanese carmakers slumped on Thursday following news of the auto tariffs, with Toyota Motor Corp., the world's largest carmaker by delivery, sinking as much as 4%. The yen was strengthening against the dollar Thursday morning.
--With assistance from Takashi Hirokawa.
(Updates with comments from the prime minister, market reactions)
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