Japanese carmakers can’t shake off fears of Donald Trump’s tariff threats

Suggestions that Washington and Tokyo could announce a trade deal later this year aren’t helping Japanese car firms rest easy

They still fear Trump’s threat of crippling tariffs and are taking pains to emphasise their contributions to the US economy

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The United States is threatening to raise tariffs on Japanese vehicle imports from 2.5 per cent at present to 25 per cent. Photo: AFP

Published: 12:30pm, 20 Jul 2019Updated: 5:11pm, 20 Jul 2019

Japan’s carmakers are not resting easy, despite recent suggestions that US President Donald Trump and Prime Minister Shinzo Abe could announce some sort of quid pro quo agreement, where Japan gives American farmers new access to its market in exchange for reduced tariffs on certain Japanese auto parts, in September.

Given the unpredictability of the US administration on trade issues, concerns remain that crippling tariffs could be imposed on the auto sector, Japan’s biggest manufacturing industry.

Japan’s auto exports have long been in the president’s cross hairs as he reiterates his “America First” slogan. And with the US election less than 18 months away, a philosophy of more jobs for workers at home and socking one to a foreign rival is likely to appeal to his core supporters. Cars are an easy mark, admits Koji Endo, an auto-sector analyst with SBI Securities in Tokyo.

“There’s no doubt in my mind that the industry here should be concerned. The United States has a US$70 billion trade deficit with Japan and around US$50 billion of that is from autos. And it has been like that for the last five years at least.

“When the deficit is at that level, then it is possible that the administration might well do something against autos,” he said.