Trump’s tariffs have a huge impact on Japan, Shigeru Ishiba will negotiate with the US

In a recent announcement, U.S. President Trump declared a 24% tariff on Japanese imports, which heavily impacts the Japanese automotive industry, accounting for a third of U.S. exports and lowering Japan’s GDP by 0.2%. Japanese Prime Minister Shiro Modi stated that Japan would not retaliate with tariffs against the U.S. and is ready to negotiate with Trump to resolve the tariff issue promptly.

Modi expressed his hope to hold a telephone conversation with President Trump next week regarding the tariff issue and emphasized his opposition to retaliatory tariffs against the U.S. He highlighted Japan’s contributions to revitalizing American manufacturing and increasing employment during a TV program appearance, stressing the need for a comprehensive plan to address various issues that may arise in negotiations, such as liquefied natural gas, automobiles, agriculture, and security concerns.

Furthermore, Modi rejected retaliatory tariffs and emphasized Japan’s status as the largest investor in the U.S., distinguishing it from countries that do not contribute to job creation. He underscored the necessity for Japan to present a comprehensive plan when negotiating with the U.S., stating that it is essential to respond effectively to President Trump’s inquiries for successful negotiations.

President Trump’s move to impose equivalent tariffs on Japanese products was a response to Japan’s imposition of a 46% tariff on American goods, with the U.S. now levying a 24% tariff on Japanese products. Trump pointed out the significant tariff discrepancy between the two countries, particularly highlighting Japan’s 700% tariff on American rice imports.

The impact of the tariff dispute extends beyond the automotive industry to various sectors such as agriculture, food, machinery, and optical equipment. Japan’s automotive exports to the U.S. totaled 1.33 million vehicles in 2024, making it the largest source of imports; with an export value of $72 billion, accounting for about one-third of Japan’s exports to the U.S.

According to estimates by the International Trade Center, a UN agency based in Geneva, Japan is expected to see a $17 billion reduction in exports to the U.S. by 2029 due to the high tariffs imposed by the U.S., with the automotive industry being the most affected.

Amid the tariff uncertainties, Japanese automakers like Toyota and Nissan are exploring strategies to mitigate the impact on their supply chains and production costs. Toyota’s North American subsidiary has pledged to assist local component manufacturers in coping with increased costs due to tariffs and is considering expanding production at U.S. factories.

Masanori Katayama, the chairman of the Japan Automobile Manufacturers Association, emphasized the importance of maintaining a strong economic partnership between the U.S. and Japan to foster competitiveness and benefit consumers and long-term economic growth. He urged productive dialogues between both nations to sustain a favorable business environment for the automotive industry.

The potential long-term repercussions of the tariffs on Japan’s economy were discussed by Kenichiro Ahara, chief economist at the Dai-ichi Life Research Institute, who highlighted the negative impact on profits, investment plans, and economic growth in Japan’s automotive sector. The uncertainty surrounding the tariffs has led to reconsiderations in production plans and other essential strategies among Japanese automakers.

Given the complexities of the tariff situation, industry experts believe that automakers will need to collaborate with component manufacturers to mitigate rising costs. Despite the challenges posed by tariff adjustments, Japanese automakers are prioritizing strategies to minimize the impact on consumer prices and bolster their competitiveness in the U.S. market.

The ongoing trade tension not only affects Japan’s automotive industry but also has broader implications for various export sectors. As Japan’s largest trading partner, the U.S. holds significant influence over Japan’s trade balance, with a trade surplus persisting for decades.