Trump Tariffs a Threat to Japanese Automakers.

US President Donald Trump’s latest tariff barrage ― 25 percent on goods from Mexico and Canada ― has Japanese automakers on edge. The new taxes took effect at 12:01 a.m. (EST) on Tuesday according to news agency Reuters. Major Japanese carmakers with plants in both countries are already moving to mitigate the impact.

What impact will Japanese auto companies have?

Nissan Motor, Toyota Motor, Mazda Motor, and Honda Motor all have factories in Mexico.

The Japan External Trade Organization, or JETRO, says that Nissan produced more than 615,000 vehicles in Mexico in 2023, and about 40 percent were exported to the US.

Toyota produced around 250,000 cars and exported 90 percent of them to the US.

Mazda exported about 50 percent of more than 202,000 cars to the US, and Honda sent about 80 percent of more than 167,000 cars across the border.

Toyota and Honda also have factories in Canada that are likely to be heavily impacted by the new tariffs.

Honda has been preparing for the news by transporting as many cars as possible into the US before the tariffs took effect. The company says it is now trying to ascertain what kind of price increases consumers will accept on its various models. It also plans to review its production bases and export markets.

Japanese chemical company Asahi Kasei plans to build a factory in Ontario, Canada, in a joint venture with Honda to produce parts for lithium ion batteries for electric vehicles and start operation in 2027.

The company was planning to export parts to the US, but is now considering selling all of them in Canada.

Trump has previously threatened to expand the tariffs on automobiles to cover imports from other countries but has not yet said which.

Automobiles, including passenger cars and trucks, account for more than a quarter of Japan’s exports to the US. Last year, they totaled more than 6 trillion yen (over 40 billion dollars).

The US currently levies a 2.5 percent tariff on imported cars. If the rate is raised ten-fold, as Trump has suggested it will be, it would have a major impact not only on automakers but also on all the companies along the supply chain.

The auto industry is calling on the Japanese government to pressure the Trump administration.

Katayama Masanori, Chairman of the Japan Automobile Manufacturers Association, attended a meeting last week to exchange opinions with Economy, Trade and Industry Minister Muto Yoji.

Katayama warned that a 25 percent tariff on all cars exported from Japan, Mexico and Canada to the US would have an adverse impact on both the Japanese and US economies. He said he hopes Japan will do its best to win exemptions to the tariffs.

Mitsubishi UFJ Research and Consulting principal economist Kobayashi Shinichiro says it is not just the major automakers who are worrying. Small and medium-sized companies that supply parts, and industries that provide steel and semiconductors, as well as industries that sell the machinery for manufacturing cars, are likely to feel the impact.

Kobayashi says Japan’s government has to make the US understand that such an aggressive stance on transactions between private companies would have a negative impact on the economies of both countries.

And he said that even if Japan can win exemption from the tariffs, a trade war between the US and other countries would still likely cause a slump in demand for cars, so the risk to the Japanese economy is rather big.

The Japanese government set up a team last month to gather information from and offer consultations to affected companies. The team has fielded about 200 inquiries. Large and small companies, mainly in the auto, steel, aluminum and other industries are seeking advice.

NHK