The Newly Reached Japan Trade Deal
Late last week, the Trump administration announced it had reached a new trade agreement with Japan, America’s fifth-largest trading partner. The deal imposes a 15% tariff on Japanese goods imported into the U.S., including Japanese-made automobiles and parts. While this 15% rate reflects a reduction, it remains significantly above Japan’s initial position entering negotiations. It is still unclear how much of that cost will be passed on to U.S. buyers of Japanese vehicles.
According to details shared on Truth Social, the agreement also includes $550 billion in Japanese investments in the United States, along with improved market access for American-made goods, including vehicles.
The American Automotive Policy Council, which represents the traditional Big Three automakers, strongly opposed the agreement. They argue it gives Japanese imports an unfair advantage—particularly over vehicles assembled in Mexico and Canada by U.S. companies using a significant number of American-made parts. Most imported vehicles, including those manufactured by U.S. automakers outside the U.S., still face a 25% base tariff.
Matt Blunt, President of the American Automotive Policy Council, stated, “This is a deal that will charge lower tariffs on Japanese autos with no U.S. content.” In an interview, he added that U.S. companies and workers “definitely are at a disadvantage,” especially with the 50% tariff on imported steel and aluminum and the 25% tariff on parts used in assembling and repairing non-USMCA-compliant vehicles still in place.
The EU Trade Deal
Similarly, a new trade agreement was reached with the European Union on Sunday, lowering tariffs on imported European vehicles to 15%. With the 25% tariff still applied to GM, Ford, and Stellantis vehicles that are not USMCA compliant, European and Japanese cars may now enjoy a pricing edge over vehicles like Buicks produced in China or South Korea.
However, the deal includes a concession favorable to American automakers: the EU will reduce its tariff on U.S.-made vehicles from 10% to 2.5%. In theory, this could encourage more European purchases of American vehicles. But the actual impact may be limited. In 2024, the EU imported approximately 165,000 U.S.-made vehicles valued at around $8.8 billion. In contrast, the U.S. imported roughly 750,000 European-made vehicles the same year, valued at $43 billion.
We’re closely watching European automakers like Audi and Porsche to see if they resume shipments of vehicles already manufactured and awaiting export to the U.S. under the new, lower tariff structure.
