Trump tariffs hit Japanese automakers
A raft of US President Donald Trump’s new tariffs come into effect today and one industry in particular is bracing for carnage.
Japanese automakers are set to be hit hard after US President Donald Trump imposed sweeping new tariffs on Japan.
The 15 per cent tariff, reduced from a 25 per cent tariff, was part of a new trade agreement that also forced Japan to pour US$550 billion into a US strategic investment fund in exchange for continued access to the American market.
The new tariffs, which come into effect on August 7, have sparked concern among the Japanese automotive industry, once a global powerhouse.
The sector, which employs nearly six million people, has faced a steady decline, hit hard by plummeting US sales and rising Chinese competition.
Mazda alone estimates the tariffs will wipe 145.2 billion yen (AUD$1.41 billion) from its operating profits this year.
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Exports from Mexico will be charged an even higher 25 per cent.
Mazda, which produces vehicles in both Japan and Mexico, said it was rolling out cost-saving measures, including rerouted shipping, increased output at its Alabama plant, and adjustments to product volume.
Without these changes, the company could have faced a loss of 233.5 billion yen (AUD$2.44 billion).
Other automakers such as Toyota, Honda, Subaru and Nissan are also reassessing operations.
The White House claims the deal will strengthen American manufacturing, especially steel and vehicle production.
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But industry observers say the real winners may be US-based foreign automakers - like Toyota and Honda - who already have plants in North America.
AutoForecast Solutions expects US light vehicle output to remain flat at 10.3 million units in 2025, with Japanese automakers investing further in local production rather than increasing imports.
Mazda may consider producing the CX-5 domestically, while Toyota could bring 4Runner manufacturing to the US.
Originally published as Trump tariffs hit Japanese automakers
