[SMM Analysis]Japan reiterated that it could not accept the US imposing a 25% tariff on imported cars

On March 4, 2025, US President Trump reiterated for the first time at a joint session of Congress that he would impose "reciprocal tariffs" starting on April 2. On April 2, Trump signed two executive orders at the White House, officially announcing the imposition of "reciprocal tariffs" on trading partners, including a 24% tariff on Japanese imports. Starting from April 3, the US imposed an additional 25% tariff on automotive products such as passenger cars, multipurpose vehicles, SUVs, and compact cars, with Japanese cars also included.

The 25% tariff imposed by the US on Japanese cars, effective from April 2, 2025, was based on the two executive orders signed by Trump on April 2, 2025, which imposed an additional 25% tariff on imported cars. The 24% reciprocal tariff imposed by the US on Japanese imports was based on the "reciprocal tariff" policy implemented by the US starting from April 2, 2025, which imposed different reciprocal tariffs on various countries and regions, with Japan's tariff rate being 24%.

On April 11, the Office of the US Trade Representative (USTR) released a list of goods for "60-day negotiations" with Japan, covering hundreds of items such as steel, aluminum, and welded steel pipes. On April 17, Trump personally participated in US-Japan trade negotiations, claiming "significant progress" but failing to reach a final agreement. On April 22, Japanese Finance Minister Shunichi Suzuki held talks with US Treasury Secretary Scott Bessent, with Japan seeking permanent exemption from reciprocal tariff treatment for Japan, but this was rejected by the US. However, the US agreed to suspend the imposition of additional tariffs on steel, aluminum, and welded steel pipes from Japan for 60 days. On April 25, the USTR released the "2025 Special 301 Report," placing Japan on the "Priority Watch List" and criticizing Japan's policies on intellectual property protection. On May 8, the US and Japan held the sixth round of tariff consultations. On June 17, Japanese Prime Minister Shigeru Ishiba met with US President Trump at the G7 Summit, with both sides exchanging views on tariff issues but failing to reach a consensus. On June 20, Japanese Chief Trade Negotiator Ryosei Akazawa stated that US-Japan negotiations were "in a fog," and although July 9 was an important date, it was not the final deadline. Japan's exports to the US have been severely affected. In May, Japan's export value to the US fell by 11.1% YoY, with the export value of automobiles decreasing by 24.7% YoY and exports declining by 3.9%. The export value of auto parts also plummeted by 19.0% YoY, with the volume decreasing by 11.9%. Currently, negotiations are still ongoing, and Japan is seeking various bargaining chips, including expanding imports of US agricultural products. However, due to factors such as the resolution of the joint meeting on agriculture, forestry, and fisheries held by the Liberal Democratic Party at the end of April, Japan finds it difficult to make concessions on agricultural imports. Additionally, there are internal divisions within the US trade negotiation team, making the negotiation outlook uncertain.

On the Japanese side, Prime Minister Shigeru Ishiba has stated that he will visit the US at an appropriate time to meet directly with Trump, and the government continues to prioritize trade negotiations with the US. Bank of Japan Governor Kazuo Ueda has also mentioned the impact of US tariff policies on the Japanese economy and stated that the Bank of Japan will make appropriate monetary policy decisions. In the process of seeking a trade agreement with the US, Japan faces the challenge of balancing domestic political pressure and industrial interests.

On the US side, there are internal divisions within the trade negotiation team, with differing opinions among Treasury Secretary Scott Bessent, Commerce Secretary Gina Raimondo, and Trade Representative Katherine Tai, adding complexity to the negotiations. Meanwhile, there are also voices within the US criticizing the Trump administration's trade protectionist policies for harming US business interests and affecting economic growth.

Finally, according to trade data, in addition to the aforementioned decline in Japan's exports to the US in May, preliminary trade statistics for May released by Japan's Ministry of Finance on June 18 show that the export value of steel, which has been subject to tariff hikes since March, fell by 1.5%, with exports decreasing by 0.8%. According to data from the Japan External Trade Organization (JETRO), approximately 30% of Japan's exports come from the automotive industry, and the US tariff hikes on automobiles have dealt a heavy blow to the Japanese economy.

SMM New Energy Industry Research Department

Cong Wang 021-51666838

Xiaodan Yu 021-20707870

Rui Ma 021-51595780

Disheng Feng 021-51666714

Yujun Liu 021-20707895

Yanlin Lü 021-20707875

Zhicheng Zhou 021-51666711

Haohan Zhang 021-51666752

Zihan Wang 021-51666914

Xiaoxuan Ren 021-20707866

Jie Wang 021-51595902

Yang Xu 021-51666760

Boling Chen 021-51666836