Trump’s proposed auto tariffs will hit Japanese cars hard

On February 14, US President Trump said that he would announce tariffs on imported cars “around April 2”. He said that he hoped to impose tariffs on automobiles, semiconductors and pharmaceuticals, just like steel and aluminum products, and repeatedly expressed his dissatisfaction with the large number of German cars imported into the United States.

Trump told reporters at the White House that the tariffs on cars “may be announced around April 2. In fact, I originally wanted to announce it on April 1 (April Fool’s Day), but I am a little superstitious and decided to announce it on April 2.”

He did not specify whether the plan or actual tariff increase would be announced in April, nor did he announce the legal basis for the target countries and tariffs, and the relationship with the “reciprocal tariffs” that he instructed to study on February 13 was unclear.

If the United States imposes tariffs on Japanese cars, it will have a significant impact. In 2024, Japan’s exports to the United States will reach 21.2951 trillion yen, of which the largest amount is passenger cars and trucks, with an amount of 6.0261 trillion yen, accounting for 28.3% of the total exports.

The second largest amount is auto parts (1.2312 trillion yen), accounting for 5.8% of the total. The US imposes a 2.5% tariff on automobiles. If the tariff is increased, related companies may be affected.

According to data from research company MarkLines, the US auto sales in 2024 will be 15.97 million vehicles. Among them, Japanese manufacturers such as Toyota and Honda account for nearly 40%. According to data from the Japan Automobile Manufacturers Association, Japan exports about 1.37 million vehicles to the United States, accounting for more than 30% of the total exports, the largest among all countries.

By company, Toyota exports 530,000 vehicles from Japan. It accounts for about 23% of its local sales. According to data from S&P Global Mobility, Mazda exports 230,000 vehicles, accounting for more than half of its sales in the United States.

Regarding automobile tariffs, Trump instructed the U.S. Department of Commerce to conduct an investigation under Section 232 of the Trade Expansion Act in 2018 during his first term, believing that the trade deficit could threaten national security.

The investigation at the time determined that “there is a threat to security”, but due to concerns from countries such as Japan and the industry, the additional tariffs were not implemented in the end.