Detroit automakers: Japan trade pact is a 'bad deal' - WSJ

Detroit automakers: Japan trade pact is a 'bad deal' - WSJ

Detroit automakers, represented by the American Automotive Policy Council (AAPC), have expressed strong reservations about a proposed trade deal that could reduce tariffs on Japanese auto imports to 15% while maintaining a 25% tariff on imports from Canada and Mexico [1]. The concern centers around the discrepancy in tariffs, which could favor Japanese imports with little U.S. content over North American-built vehicles with high U.S. content.

Matt Blunt, who heads the AAPC, stated, "any deal that charges a lower tariff for Japanese imports with virtually no U.S. content than the tariff imposed on North American-built vehicles with high U.S. content is a bad deal for U.S. industry and U.S. auto workers" [2]. The Detroit Three automakers—General Motors (GM), Ford (F), and Stellantis (STLAM.MI)—are reviewing the agreement but have already signaled their displeasure.

The proposed trade deal comes amidst ongoing U.S. trade tensions. President Trump has threatened to hike tariffs on Mexico to 30% and Canada to 35% on August 1 [3]. GM reported that tariffs cost the company $1.1 billion in the second quarter and expects the impact to worsen in the third quarter [2]. Stellantis expects more impact from U.S. tariffs on vehicles and auto part imports in the second half of 2025, having already reported costs of 300 million euros ($352 million) [2].

The trade deal also follows criticism from the AAPC about a previous agreement with Britain, which they argued would harm the U.S. auto sector [2]. The British trade deal allows for a quota of 100,000 cars a year to be sent to the U.S. at a 10% tariff rate, almost the total Britain exported last year [2].

The AAPC's concerns highlight the potential economic impact of the trade deal on U.S. automakers and workers. The disparity in tariffs could lead to increased competition from Japanese imports, potentially hurting domestic production and employment in the U.S. auto industry.

References:
[1] Reuters. (2025, July 22). Detroit Three automakers raise concerns about Japan trade deal. Retrieved from https://www.reuters.com/business/autos-transportation/detroit-three-automakers-raise-concerns-about-japan-trade-deal-2025-07-23/
[2] Investing.com. (2025, July 23). Detroit Three automakers raise concerns about Japan trade deal. Retrieved from https://www.investing.com/news/stock-market-news/detroit-three-automakers-raise-concerns-about-japan-trade-deal-4147139
[3] Yahoo Finance. (2025, July 23). Detroit Three automakers raise concerns over Japan tariff deal. Retrieved from https://finance.yahoo.com/news/detroit-three-automakers-raise-concerns-013741104.html