US President Donald Trump has agreed to lower the auto tariffs for Japan, sparking concerns among American automakers who fear they are being left at a disadvantage. The deal comes after Trump imposed a 25% tariff on all foreign auto manufacturers in April, affecting not only Japanese companies but also those from Mexico and Canada.
Under the new agreement, the US will reduce its tariff rate to 15% for Japanese autos and parts, potentially leading to higher duties for some cars manufactured by US companies that rely on imported parts. The move is seen as a positive step forward in trade talks with Japan, which could pave the way for similar deals with other major trading partners like the EU and South Korea.
However, US automakers are worried that lower tariffs for foreign manufacturers could hurt domestic industry due to complex North American auto supply chains. “Any deal that charges a lower tariff for Japanese imports with virtually no US content than it does North American-built vehicles with high US content is a bad deal for the US industry and US auto workers,” said Matt Blunt, president of the American Automotive Policy Council.
The decision has sparked concerns in Germany, where companies like Volkswagen and BMW are already struggling to cope with double-digit declines in exports to the US. German auto association VDA President Hildegard Müller warned that the damage to supply chains is enormous and must not be increased further.
As trade talks with other countries progress, American automakers fear they could be left at a disadvantage if similar deals are struck with the EU and South Korea. The White House has argued that tariffs will help build more cars at home, but so far, domestic companies have taken a hit from the duties, despite receiving some relief through a complicated rebate scheme.
The news of the deal has sent shockwaves through the auto industry, with shares in Japanese car companies like Toyota and Honda soaring. However, shares in South Korean and European carmakers have also risen, as hopes grow that their leaders could strike similar deals.
Source: https://www.politico.com/news/2025/07/23/trumps-massive-deal-with-japan-is-giving-u-s-automakers-heartburn-00473313