1 Year On, Trump Tariffs Continue Battering Japan Automakers

Tokyo, July 20 (Jiji Press)–A high tariff policy introduced by the administration of U.S. President Donald Trump continues to cripple Japanese automakers. In July last year, the Japanese and U.S. governments agreed that the U.S. tariffs on products from Japan would be reduced from the level initially announced by Trump in exchange for an expansion in Japanese investments in the United States. The tariffs on Japanese automobiles were cut to 15 pct from 27.5 pct in September, but the revised rate is still far higher than the 2.5 pct before the inauguration of the second Trump administration in January 2025. In fiscal 2025, which ended in March this year, combined costs from the Trump tariffs at six major Japanese automakers, including industry leader Toyota Motor Corp., exceeded 2.4 trillion yen. There had been a prevailing view that Japanese automakers would unlikely face difficulties passing on the high tariff costs to American consumers because it is said to be easier to raise prices in the United States than in Japan. However, price hikes were limited amid fierce competition with U.S. and European automakers. Toyota only conducted regular price revisions. Honda Motor Co. remains cautions, saying that the company will consider price revisions when model changeovers are carried out. Many automakers are putting efforts into cutting costs. Mazda Motor Corp. last year announced an agreement to reinforce its collaboration with Nippon Steel Corp., from which it receives supplies of materials. Under the accord, Mazda successfully reduced procurement costs for steel sheets and other materials and the number of components for the development of a new version of the CX-5, its mainstay SUV model. Toyota patiently continued cost-cutting efforts, which boosted its fiscal 2025 profit by 275 billion yen. Still, their efforts have not been enough to fully make up for the huge U.S. tariff costs, and their profits remain under pressure. Some manufacturers have started to pass on the tariff costs to consumers. Hitachi Construction Machinery Co. had expected the U.S. tariffs to increase its costs by 9.3 billion yen in fiscal 2025, but succeeded in slashing the costs by around half through price increases. Major timepiece maker Seiko Group Corp. and industry peer Citizen Watch Co. offset increased costs from the tariffs with price hikes and sales growth. Meanwhile, a senior official of a major office equipment manufacturer cited increases in semiconductor procurement costs as well as labor and other expenses, in addition to the U.S. tariffs. The official indicted that Japanese industries are struggling in the United States, where competition is increasingly severe, saying: “It is difficult to determine to what extent the costs should be reflected in the prices of our products. It also depends on the strategies of rival companies.” END [Copyright The Jiji Press, Ltd.]