Japan Rejects 25% U.S. Car Tariffs Citing 3.3 Million Annual U.S. Production

Japan has reiterated its stance against the U.S.'s proposed 25% tariffs on cars, emphasizing the significant contributions of Japanese automakers to the U.S. economy. Ryosei Akazawa, Japan’s chief trade negotiator, highlighted that Japanese automakers produce approximately 3.3 million cars annually in the U.S., a figure that surpasses the 1.37 million cars they export to the country. This production has resulted in over $60 billion in investments and the creation of 2.3 million local jobs in the U.S.

Akazawa, who is set to engage in his seventh round of trade negotiations with U.S. counterparts in Washington, stressed that Japan’s automobile industry has made substantial contributions to the U.S. economy. He reiterated Japan’s position that the 25% automobile tariff is unacceptable. The negotiations have been contentious, with the U.S. focusing on its trade deficits in the sector while Japan seeks to protect its key economic pillar. Despite six rounds of talks, no agreement has been reached on tariffs.

Of the 3.3 million cars produced in the U.S. by Japanese automakers, about 300,000 are shipped to other nations, contributing to a trade surplus for the U.S. However, Japan’s trade surplus with the U.S. last year stood at ¥8.6 trillion ($59.4 billion), with roughly 82% of the gap attributed to cars and car parts. This differential has drawn the attention of U.S. President Donald Trump, who aims to reduce U.S. trade deficits through tariffs.

Akazawa’s visit to Washington follows the failure of Japanese Prime Minister Shigeru Ishiba and U.S. President Donald Trump to reach a deal on higher U.S. tariffs during the Group of Seven summit. Japan faces a combination of across-the-board tariffs and sectoral ones. The former is set to increase from 10% to 24% on July 9 unless a deal is reached, while the latter includes a 25% levy on cars and auto parts and a 50% tariff on steel and aluminum.

Tokyo has maintained its position that it will seek to resolve all tariff disputes in a single package that addresses sectoral tariffs. Akazawa expressed caution about setting a firm deadline, which could weaken Japan’s negotiating position, while keeping the July 9 deadline in mind. The tariffs are already impacting the Japanese economy, with exports to the U.S. declining, particularly for cars. The economy faces the risk of entering a technical recession ahead of an upper house election on July 20.