How Japan—and Other U.S. Allies—Can Work Around America

Source Link

President Donald Trump’s tariffs have forced a global reckoning. For Japan and many other countries, the vulnerability that comes with relying on U.S. markets has become startlingly clear. First came tariffs on Canada, 

China, and Mexico. Then, in February, the administration introduced a 25 percent tariff on steel and aluminum (this week, it raised those tariffs to 50 percent). In March, it imposed a 25 percent tariff on automobiles and auto parts. And in April, Trump announced so-called reciprocal tariffs that imposed a base tariff of ten percent on imports from all countries plus additional duties on a country-by-country basis. The country-specific tariffs were paused for 90 days,

until July. Along with various tariffs targeting Canada, China, and Mexico, they are now in legal limbo after a U.S. federal court ruled last week that the president had overstepped his authority in imposing them.

For the countries affected by U.S. tariffs, the potential economic harms are far too great to simply hope that an American court will make the problem go away or that the president will change his mind. Japan, in particular, is dangerously exposed to the U.S. market—but as the fourth-largest economy in the world, 

with relationships across the globe, Japan also has the resources and opportunity to craft an effective multilateral strategy for coping with Washington’s obstructionist approach to trade.

If all of Trump’s proposed measures enter force, Japan faces a 25 percent tariff on automobiles and auto parts, a 50 percent tariff on steel and aluminum, and a 24 percent tariff on all other goods it exports to the United States. Japan’s economy depends on exports. The United States is its second-largest market, after China (including Hong Kong), 

accounting for roughly 20 percent of all exports, and steep tariffs would make many Japanese goods too expensive for American consumers. Tariffs on automobiles and auto parts are especially damaging, as these goods represent more than a third of Japan’s exports to the United States. Japan’s top 1,000 companies expect a seven percent drop in their total profits between April 2025 and March 2026, after making continuous gains since 2020.