Automotive News Europe — 2025-07-03
Automotive Industry
Japanese carmakers have largely absorbed the cost of President Donald Trump’s tariffs on auto imports, a move that could undermine the Asian nation’s negotiating power ahead of a July 9 deadline that will see duties rocket even higher.
So far, just three of Japan’s six major automakers have raised prices in the U.S., and only Subaru Corp.’s hike has come close to the 25 percent tariff imposed on imported vehicles.
Toyota Motor Corp., the world’s No. 1 carmaker, only lifted prices on some models by a few hundred dollars while Mitsubishi Motors Corp. increased prices by an average of just 2.1 percent across three models. The average price of a new car in the U.S. rose 2.5 percent in April to about $48,700.
The modest nature of the changes signals Japan’s carmakers are reluctant to pass the hit on to consumers. But it’s a decision that could backfire. Sparing American shoppers any kind of extreme sticker shock means Trump is less likely to change course.
Auto tariffs have emerged as a key sticking point in bilateral negotiations between the U.S. and Japan as Trump fixates on U.S. deficits in the sector while Japan tries to safeguard one of its main economic powerhouses.
Despite Japan’s chief trade negotiator Ryosei Akazawa holding a seventh round of talks with U.S. counterparts, the two countries remain at loggerheads and the clock is ticking: Across-the-board levies of 24 percent on Japanese goods are set to come into effect on July 9. Trump’s even suggested they could be as high as 35 percent.
Industry watchers say an extended stalemate could force Japanese carmakers’ hands, with an ultimately beneficial outcome.
“If prices continue to rise due to Trump’s tariffs, the government will realize it’s not a simple scenario where raising tariffs benefits the U.S. economy,” Takeshi Miyao, an analyst at automotive consultancy Carnorama, said. “This may lead to changes in tariff negotiations.”
Japan’s cautious approach contrasts with the quick retaliation by China, which leveraged its dominance in industries like e-commerce to make it clear to Trump that American consumers would be footing the bill. Some products sold on platforms like PDD Holdings Inc.-owned Temu and Shein Group Ltd. nearly doubled in price in the wake of fresh duties.
Tokyo, for its part, has maintained its stance that it will try to settle all the tariff disputes in one go. Akazawa has made clear that despite the looming July 9 deadline, he won’t be pressured into a deal.
The protracted negotiations make it more likely Japan’s carmakers will turn to price increases in the U.S. to minimize the impact on their bottom lines.
Those hikes could start when manufacturers offer upgraded specifications on models, Bloomberg Intelligence senior analyst Tatsuo Yoshida said. Still, any price increases are likely to be phased in gradually, and it could take as long as three to four years for a 25 percent levy to be reflected in vehicle prices, he said.
While the consensus is that some level of tariffs on cars will be inevitable, a lower 10 percent tariff could be more palatable. The auto industry is a bellwether for wage trends and generates around 10 percent of gross domestic product. The sector also accounts for one-third of Japan’s exports to the U.S.
“There’s no reason to continue cutting profits indefinitely to offset high tariffs when it’s unclear how long this situation will persist,” Carnorama’s Miyao said.