13 June 2025

U.S. Tariffs Hit Japan Inc. Hard

Rupakjyoti Borah

Since the beginning of the Trump Administration’s second term, there has been a lot of turmoil in the U.S.’ international relations as well, including in the U.S.-Japan relationship.

While in the earlier term of President Trump (between January 2017 and January 2021), there was great camaraderie between President Trump and the former Japanese Prime Minister Shinzo Abe, this seems to be missing in the second Trump Administration as Japanese PM Shigeru Ishiba was not among the first to meet President Trump, though Japan is the closest U.S. ally in East Asia.

Under Trump, there is no denying that Japan’s automotive sector, is reeling from a 25 percent tariff on finished automobiles and car parts. In addition, Japan has also been slapped with 24% reciprocal tariffs, though they have been paused for a while (along with those on many other countries). In the light of these tariffs on the automotive sector, leading Japanese auto manufacturers have projected a fall in revenues.

Teething Troubles

PM Shigeru Ishiba did visit Washington DC, in February this year, but that visit could not break the ice as far as the Trump-unleashed tariff war is concerned. During the final weeks of his term, the then U.S. President, Joe Biden, had blocked the proposed $15 billion acquisition bid by Japan’s largest steel producer, Nippon Steel, of U.S. Steel citing “national security concerns”. Though now President Trump has indicated that he also “opposes the deal” but at the same time, he has also indicated that he is “open to negotiation.”

There could be other problems in the bilateral ties as in Trump’s approach towards the security provided by the U.S. forces to Japan. Earlier in March 2016, Trump (as the then Republican frontrunner) had remarked that “the U.S. spends too much money protecting countries like Japan and Saudi Arabia and that they may need to go nuclear”

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