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Chicago Tribune
2 hours ago
- Automotive
- Chicago Tribune
Column: Japan trade deal is more than meets the eye
The Trump administration has reached an important economic agreement with Japan. International trade and finance today are complicated, and therefore, agreements can be difficult to sum up briefly. In this case, there is also significant background, somewhat different from our history with Europe, that bears in important ways on the specifics of the accord. Japan has committed to provide $550 billion in new funding to the United States in the form of investment, loans and loan guarantees. President Donald Trump is justified in declaring that the agreement represents a major victory for his approach of negotiating concessions from other nations, especially major partners in Asia and Europe. However, the agreement is also precisely in line with the long-term strategy of Japan to sidestep U.S. restrictions on direct imports by emphasizing investment in our country. This dates from the Reagan administration, years when trade and other frictions between Tokyo and Washington were at a peak. Reagan officials pressed their counterparts in Japan to accept what were termed 'voluntary export agreements,' meaning in fact a ceiling on exports to the U.S. Automobiles were a high priority, reflecting the fact that the traditional Big Three U.S. auto manufacturers — American Motors (and successor Chrysler), Ford and GM — were suffering from growing, increasingly successful competition from Japan and also Europe. Nissan, Toyota, Fiat, Volkswagen and other foreign firms were making great inroads in North America. Japanese car manufacturers responded to the new, significant challenge represented by the U.S. voluntary export agreements in two ways. First, their export profiles were changed. Emphasis on compact cars was shifted to a new emphasis on larger, more luxurious models. Toyota's transformation is especially striking in this regard. Second, tremendous new emphasis was given to building manufacturing facilities within the United States. The second dimension effectively embedded foreign manufacturers in the U.S, establishing a strategic position that would greatly benefit foreign vehicle manufacturers over the long term. President Trump has a strong personal interest in, indeed fascination with, traditional economic tariffs. However, beginning with the Bretton Woods institutions, initially defined by the Allied powers at a New Hampshire conference in 1944, such trade tariffs have become generally regulated and stabilized at relatively low levels. Significant tariff wars, along with competitive currency devaluations, were rightly viewed as major contributing factors to interwar economic dislocations, capped by the Great Depression. This, in turn spawned totalitarian dictatorships and led to World War II. The creation of the United Nations in 1945 institutionalized efforts to maintain greater international stability. The UN has been an umbrella for the Bretton Woods institutions – the General Agreement on Tariffs and Trade (GATT), now the World Trade Organization (WTO), along with the International Monetary Fund and the World Bank. The end of the Cold War permitted the UN family of institutions to become truly global. The rise of China, and serious competition with the United States that encompasses ideological and military as well as economic dimensions, places a premium on close, positive cooperation with other Asia powers. Japan along with India and South Korea, and the special case of Taiwan, are all lynchpin components important to the containment effort. Farsighted U.S. foreign policies since World War II created durable ties with economically and militarily significant nations in East and South Asia. The nations cited are also today functioning democracies. Japan's shrewd, flexible adjustment to changing U.S. political winds over the long term is also fundamentally important.
CBS News
10 hours ago
- Automotive
- CBS News
Stellantis warns of $1.7 billion earnings hit from tariffs
Stellantis, the maker of more than a dozen automotive brands, on Tuesday said that President Trump's tariffs will cost the auto manufacturer 1.5 billion euros, or about $1.7 billion, in 2025. The parent company of brands like Chrysler, Fiat, Jeep and Peugeot announced the projected earnings hit as Mr. Trump clinches deals with U.S. trade partners that include steep tariffs on U.S. imports, ahead of an Aug. 1 deadline. Stellantis said it expects the majority of the hit, about 1.2 billion euros, will come in the second half of 2025. "Stellantis updates its estimate of 2025 net tariff impact to approximately €1.5 billion, of which €0.3 billion was incurred in H1 2025. The Company remains highly engaged with relevant policymakers, while continuing long-term scenario planning," the company said in a statement Tuesday as it reported financial results for the first half of 2025. The automaker acknowledged that Mr. Trump's 25% tariffs on imports of autos and auto parts to the U.S. are hurting its business, particularly in North America. Stellantis builds its Chrysler, Dodge and Jeep brand vehicles in factories in Canada and Mexico, meaning they're subject to the new levies. While Mr. Trump's deal with the EU, calling for 15% tariffs across the board will make BMW and Mercedes-Benz vehicles more expensive for U.S. consumers, according to analysts. Stellantis is largely unaffected by the EU agreement. "Stellantis isn't much affected by the EU/US tariff news — the question for STLA is if the Detroit-3 will want to renegotiate the [U.S.-Mexico-Canada Agreement (USMCA)] tariff after the EU and Japan got a better deal," UBS analysts said in a research note. Other automobile manufacturers, including General Motors, have been bracing for impact from tariffs. GM CEO Mary Barra said the company took a $1.1 billion hit from tariffs in the second quarter, and that the company is taking steps to reduce its tariff exposure by investing in U.S. assembly plants. European automaker Volkswagen also said last week that tariffs cost the company $1.5 billion in the first half of 2025.
CTV News
11 hours ago
- Automotive
- CTV News
Stellantis faces US$1.7B hit from U.S. tariffs this year
MILAN — Stellantis has forecast that U.S. tariffs would cost it 1.5 billion euros (US$1.7 billion) this year, five times the hit taken in the first six months of the year when the carmaker tallied losses of 2.3 billion euros ($2.65 billion). The maker of Jeep, Chrysler, Fiat and Peugeot cars said Tuesday that net profits plummeted from 5.6 billion euros ($6.5 billion) in the same period last year as it burned 3.3 billion euros ($3.8 billion) in cash for the cancellation of a hydrogen fuel cell project, changes in the fine regime for U.S. carbon emission regulations, and write-downs on platform investments. U.S. President Donald Trump's tariffs cost the company 300 million euros ($346 million) in the first six months of the year, Stellantis said. During the period, U.S. shipments were down by nearly a quarter as the carmaker reduced the importation vehicles produced abroad. Stellantis said it expected net revenues to increase over the next six months compared with the first half, when they dropped 13% to 74.3 billion euros ($85.7 billion). The carmaker also said cash flow would improve. Incoming CEO Antonio Filosa, who was confirmed in the role last month, said the new executive team 'will continue to make the tough decisions needed to re-establish profitable growth and significantly improve results.'' 'My first weeks as CEO have reconfirmed my strong conviction that we will fix what's wrong with Stellantis,'' Filosa said in a statement.
Business Insider
11 hours ago
- Automotive
- Business Insider
Automakers are starting to reveal how much Trump's tariffs are costing them
The auto industry is still trying to unravel a tangled tariff web, and the bill just keeps getting bigger. Jeep and Ram owner Stellantis became the latest automaker to forecast a heavy hit from Trump's tariffs on imported vehicles on Tuesday. The Chrysler maker said that it expected tariffs to cost it around €1.2 billion ($1.4 billion) in the second half of this year, after a €300 million impact in the first half of 2025. Stellantis, which builds Chrysler, Dodge, and Jeep models in its factories in Canada and Mexico, has been hit hard by the Trump administration's 25% tariff on vehicles and car parts imported into the US. Other automakers are also feeling the pain. General Motors, which builds models for the US market in Korea, Mexico, and Canada, said last week that the tariffs had cut $1.1 billion off its profits in the last quarter. CEO Mary Barra said that GM was working to reduce its tariff exposure and build up its US manufacturing presence, but the company warned that the worst was still to come. GM estimated that the tariffs could cost it between $4 and $5 billion this year. Trump's recent trade deals have slashed the tariffs on importing cars from Japan and Europe to the US from 25% to 15%, but manufacturers still have to deal with a hodgepodge of import restrictions and fees. The 25% tax on automobile parts means that even carmakers who build their cars in the US face a serious tariff headache. Tesla, which has factories in California and Texas but still uses some imported components, told investors last week it incurred a tariff-related cost of $300 million in the previous quarter, with CFO Vaibhav Taneja warning that costs are likely to increase in the coming months. European manufacturer VW also said last week it had suffered a $1.1 billion tariff-related hit in the first half of this year, while Swedish carmaker Volvo took a $1.2 billion impairment charge in part due to the escalating cost of the levies. Experts and analysts have warned that many of the costs facing automakers will be passed on to US consumers in the form of higher car prices and fewer models. A study by the Center for Automotive Research published in April found that the 25% tariffs on imported cars and auto parts would hike the cost of vehicles produced in the US by over $4,000 and imported vehicles by nearly $9,000.
Washington Post
15 hours ago
- Automotive
- Washington Post
Stellantis faces $1.7B hit from US tariffs this year
MILAN — Stellantis has forecast that U.S. tariffs would cost it 1.5 billion euros ($1.7 billion) this year, five times the hit taken in the first six months of the year when the carmaker tallied losses of 2.3 billion euros ($2.65 billion). The maker of Jeep, Chrysler, Fiat and Peugeot cars said Tuesday that net profits plummeted from 5.6 billion euros ($6.5 billion) in the same period last year as it burned 3.3 billion euros ($3.8 billion) in cash for the cancellation of a hydrogen fuel cell project, changes in the fine regime for U.S. carbon emission regulations, and write-downs on platform investments.
