Japanese Automakers Deny Raising US Prices Due to Tariffs

Japanese automakers Toyota, Honda, and Nissan have denied raising prices in the US due to tariffs imposed by the Trump administration. Toyota attributed price increases to operational costs, while Honda cited added feature content and Nissan said it was leveraging US-produced vehicles to offset tariffs. The companies had previously estimated the impact of US tariffs on their finances.

Japanese automakers Toyota, Honda, and Nissan have publicly denied raising prices in the US due to tariffs imposed by the Trump administration. Instead, they have attributed price increases to operational costs, added feature content, and leveraging US-produced vehicles to offset tariffs.

Toyota, for instance, has stated that the price increases are primarily due to operational costs, while Honda cited added feature content as the main reason. Nissan, on the other hand, has mentioned that it is using more US-produced vehicles to mitigate the impact of tariffs. These companies had previously estimated the impact of US tariffs on their finances, but the extent to which tariffs have contributed to price increases remains a subject of debate.

The Trump administration has significantly expanded its 50% tariffs on steel and aluminum imports, adding 407 derivative product codes to the list of goods subject to these levies [1]. This expansion is part of the ongoing efforts by the administration to protect domestic industries and address trade imbalances. The impact of these tariffs on the financial markets and the broader economy remains to be seen, but investors and financial professionals should closely monitor the developments to understand the potential implications for these companies and the industries they serve.

The auto tariffs have also affected Japanese and Korean automakers, with companies such as Toyota, Honda, and Nissan experiencing significant financial strain. For example, Toyota's chief financial officer revealed that US tariffs had carved a staggering ¥1.4 trillion — nearly US$9.5 billion — off the company’s full-year operating profit [2]. This has led to a 16% downward revision to ¥3.2 trillion in full-year operating profit.

Despite the financial challenges posed by tariffs, Japanese automakers have been reluctant to pass tariff-related costs directly to US consumers. Instead, they have prioritized internal cost-cutting measures and gradual price increases. The extent to which these companies can shift costs to buyers will play a key role in determining how much financial strain they face.

The China challenge
While tariffs dominate headlines, a deeper challenge looms: China’s rise as a global automotive powerhouse. Once a vital growth market for Japanese and Korean brands, China has evolved into a formidable competitor. As domestic demand weakens in Japan and Korea, automakers now face intensifying competition from Chinese rivals, both at home and abroad.

With poor corporate operating performance on the horizon – even with the rollback to 15% – and Chinese manufacturers in the ascendency, especially when it comes to must-have electric vehicles, where does this leave captive finance operations?

Captive in the firing line
At the core of every Japanese and Korean captive finance provider — Toyota Financial Services, Honda Finance, Nissan Financial Services, Hyundai Capital, Kia Finance — is a delicate balance of credit, risk, and customer trust. When tariffs drive up vehicle costs and squeeze manufacturer margins, the impact doesn’t stop at the factory gate — it reaches the car buyer.

Manufacturers absorbing tariff shocks often choose to swallow costs to preserve market share. This compresses auto profits and limits their ability to subsidise financing deals, making generous leasing terms harder to sustain. The result? Consumers may face stricter credit assessments, higher down payments, and less favourable lease options. In some cases, captives may pivot toward used-vehicle financing, where margins are more manageable and demand remains resilient.

In this environment, captive finance divisions are no longer passive enablers — but become stabilisers of sales and customer loyalty. To stay competitive, captives will come under pressure to redesign customer touchpoints — to offer refinance incentives, loyalty discounts, and lease adjustments to keep buyers engaged.

References:
[1] https://www.reuters.com/business/us-commerce-dept-widens-products-subject-steel-aluminum-tariffs-2025-08-15/
[2] https://www.motorfinanceonline.com/features/us-tariffs-tighten-screws-on-japanese-and-south-korean-captive-finance/