Corporate Japan's nerves fray as US tariff talks drag on
A survey finds most firms worry US levies will hurt earnings. An expert says Japan may need to offer more local investment if it wants the US to compromise on auto tariffs.
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Yomiuri Shimbun
21 minutes ago
- Yomiuri Shimbun
Carmakers' Anxiety Grows as U.S. Tariff Talks Stall;Japan Exporters May Have No Choice But to Raise Prices
Yomiuri Shimbun file photo Automobiles produced in Japan for export are lined up at the port of Kawasaki in March. Concerns are mounting among Japanese carmakers that Japan-U.S. tariff negotiations will be prolonged, as the two sides failed to reach an agreement at their summit meeting on Monday. With some new U.S. tariffs, including those on automobiles, already in place, Japanese firms can expect a greater impact the longer negotiations continue. Japanese carmakers and companies in other industries may need to review their pricing strategies for the U.S. market. Subhead: Tariff help desks At a press conference following Tuesday's Cabinet meeting, Economy, Trade and Industry Minister Yoji Muto expressed his intention to implement measures that would mitigate the impact on domestic companies, including small and medium-sized enterprises. 'We are receiving an increasing number of inquiries about cash flow,' he said. 'July 9 is the deadline for the [imposition by the United States of its currently suspended] additional reciprocal tariffs, so I want to understand the situation and discuss this issue with the prime minister.' In April, the government set up tariff help desks at 1,000 locations nationwide. By early June, the desks had received about 3,500 consultations, and inquiries related to cash flow had recently increased, according to sources. The automobile industry is particularly concerned about the impact. In fiscal 2024, automobiles and auto parts accounted for a total export value of ¥7.4 trillion, representing 34.2% of all of Japan's to the United States. Given its broad base, the car industry's impact on the Japanese economy will be significant. Vexing situation The Japanese government is seeking a comprehensive review of U.S. tariffs, and lowering automobile tariffs is its top priority in negotiations. A Japanese government official said, 'We must prepare for a long battle,' as the divide between Japan and the United States continues to persist. A senior executive at a major automaker sighed: 'We had high hopes, so this is disappointing. However, an easy compromise would also be problematic. We remain in a vexing situation.' Toyota Motor Corp. estimates that the increased costs associated with U.S. tariff measures will reduce its operating profit by ¥180 billion in April and May alone. Subaru Corp., whose vehicles are popular in the United States, exports from Japan more than 40% of the cars it sells in the United States. This reliance on exports is expected to reduce its operating profit by up to ¥360 billion for the fiscal year ending March 2026. The longer the negotiations drag on, the more the manufacturers' profits will decrease, which will inevitably affect parts suppliers as well. Possible price hikes Japanese automakers have been selling vehicles in the United States primarily from inventories exported before the tariffs took effect. Now, with more than two months having passed since the tariffs were imposed, their inventories are beginning to dwindle. As tariff costs directly translate to export costs, a senior executive at a major automaker stated that it would be impossible for their company to absorb all tariff costs themselves, indicating that they would eventually have to resort to price increases. Many Japanese automakers have been cautious about raising prices, fearing it could dampen demand for new cars. However, they may soon be forced to reevaluate their pricing strategies. 'If additional tariffs on the automobile industry continue, it could trigger a gradual economic recession,' said Takahide Kiuchi, executive economist at Nomura Research Institute Ltd. Nevertheless, he suggested that a revision of tariff policies could occur if inflation concerns in the United States increased. He advised the government to 'patiently await a revision rather than easily yield to the United States.'
Kyodo News
2 hours ago
- Kyodo News
Nippon Steel finalizes deal to make U.S. Steel wholly owned
KYODO NEWS - 35 minutes ago - 23:26 | All, Japan, World Nippon Steel Corp. said Wednesday it has finalized a $14.1 billion deal to acquire United States Steel Corp. as a wholly owned subsidiary after U.S. President Donald Trump reversed his initial opposition and allowed the deal to proceed. The move will give Japan's largest steelmaker, and the world's fourth-largest, greater access to the growing U.S. market for high-grade steel, with U.S. Steel issuing a golden share to the U.S. government that grants veto power over key management decisions. "Together, Nippon Steel and U.S. Steel will be a world-leading steelmaker, with best-in-class technologies and manufacturing capabilities," the two companies said in a joint statement. Nippon Steel said it has concluded a National Security Agreement with the U.S. government and pledged to invest around $11 billion by 2028 in the iconic but struggling Pittsburgh-based company. Under the agreement, the U.S. president or a designated official will have the right to approve certain management decisions, including the closure or idling of U.S. Steel's existing manufacturing facilities in the United States. Related coverage: Trump effectively approves Nippon Steel's takeover of U.S. Steel Trump says U.S. Steel controlled by him with "golden share" Trump's steel tariff hike not raised in Japan-U.S. talks: negotiator
NHK
2 hours ago
- NHK
Nippon Steel completes US Steel acquisition
Japan's Nippon Steel says it has completed the necessary procedures to buy US Steel, turning it into a wholly owned subsidiary. Nippon Steel announced the completion of the deal on Wednesday night, Japan time. The acquisition valued at around 2 trillion yen, or nearly 14 billion dollars, follows negotiations with US President Donald Trump's administration. Last week, the two companies announced that Trump had approved their partnership. Their statement said they had entered into a National Security Agreement with the US government. The NSA includes commitments related to domestic production, trade matters and governance, including a "golden share" to be issued to the US government. The "golden share" allows the US to veto important decisions related to the management of US Steel. The statement also said the NSA "provides that approximately 11 billion dollars in new investments will be made by 2028." Nippon Steel announced a plan to buy out US Steel about 18 months ago. But then-President Joe Biden issued an order blocking the purchase on national security grounds. Nippon Steel aims to expand operations in the US where it sees potential for growth and expects strong demand for high-grade products.
