Japan protests US’ plan to hike auto import tariffs amid industry anxiety

Japan, along with China and the EU, has not shied away from voicing its protest to the administration of US President Donald Trump against hiking the rates of imported vehicle and spares’ tariffs, to, in some cases, as much as 25 percent.

The Japanese government stands firmly against Washington’s latest move toward unilateral protectionism with Japan’s top government spokesperson Chief Cabinet Secretary Yoshihide Suga telling a press briefing on the matter recently that “any trade measures should be consistent with World Trade Organization (WTO) agreements,” adding that he would carefully monitor the situation.

Japanese Trade Minister Hiroshige Seko pulled no punches when it came to offering his view on Washington’s latest protectionist moves, stating recently that “Such a move would plunge the global market into turmoil. The WTO rules should be adhered to.”

Seko said he will tell US trade officials that any such measures must be consistent with the WTO’s multilateral trade system and that Japan will keep a watchful eye on how the US newly-launched investigation shapes up.

As many Japanese senior ministers and the hierarchy of Japan’s automakers have consistently pointed out that the US is the biggest market for Japanese cars, with automakers increasingly shifting production hubs to the US, providing jobs for Americans and helping with economic growth.

According to the Japan Automobile Manufacturers Association, Japanese carmakers exported around 1.77 million units to the US in the year ended March, with exports from Japan to the US actually sliding recently.

If Trump decides to make it financially preclusive for exporters to maintain their level of exports, then more companies may chose to open production hubs in the US, which will ultimately lead to the hollowing out of Japan’s domestic industry, analysts have pointed out.

According to Takeshi Miyao, an analyst at Tokyo-based auto market researcher Carnorama, the new tariffs would “hit Mazda Motor especially, and automakers that do not have manufacturing bases in the US.”

“Other companies will be forced to adjust the proportion of manufacturing between their home countries and the US, possibly forcing them to invest in greater capacity in the US,” Miyao also added.

Japan’s, as with other countries’ firm backlash against the potential hike of auto import tariffs by Washington comes as the US Commerce Department has launched a probe into whether auto imports into the US pose a threat to its economy and national security.

Local auto analysts in Japan are struggling to find the logic or plausibility to Trump instructing the US Commerce Department to investigate the impact of vehicle and auto parts imports on national security.

“There is evidence suggesting that, for decades, imports from abroad have eroded our domestic auto industry,” US Commerce Secretary Wilbur Ross was quoted by local media as saying.

“The Department of Commerce will conduct a thorough, fair, and transparent investigation into whether such imports are weakening our internal economy and may impair national security,” Ross also said .

Hisao Katayama, a senior equity analyst at Nomura Securities Co., told Xinhua that in the end, cool heads would prevail and losses for exporters may not be as hefty as first thought. “The new tariff hike could lead to increased employment in the auto sector in the US, but looking at the big picture, it would bear an overall negative impact on the US economy,” Katayama proffered.

“And no such moves toward protectionism can occur in a vacuum, especially in a new world leaning toward multilateral free trade agreements. Other countries [including Japan] can and will impose retaliatory tariffs against the US on sectors or products that might be economically sensitive and hurt the US economy,” said Katayama.