Japan's top automakers absorb W22tr hit from US tariffs as price hikes prove difficult

Japan's six major automakers have taken a combined hit of 2.4 trillion yen ($14.8 billion), or about 22 trillion won, as US tariffs on Japanese vehicles climbed from 2.5 percent to 15 percent, Jiji Press reported Monday.

The news agency noted that Wednesday marks one year since Japan and the United States reached a trade agreement reducing their mutual tariffs from 25 percent to 15 percent. It tallied the total tariff burden borne by six automakers — including Toyota and Honda — over the 12-month period from April 2025 through March 2026.

The US originally imposed a 2.5 percent tariff on Japanese vehicles, but the rate surged to 27.5 percent in April last year after President Donald Trump imposed additional levies. The two countries then concluded trade negotiations in July last year, with Japan agreeing to expand investment in the US and other conditions in exchange for a reduction in the auto tariff to 15 percent, which took effect in September of that year.

The Nikkei estimated that Trump administration tariff measures cut operating profit at major Japanese automakers by about 30 percent during the April–December period last year.

Jiji Press noted that passing tariff increases on to consumers through higher prices — an option initially floated given the relative ease of raising vehicle prices in the US market — has become a difficult choice for Japanese automakers amid stiff competition from rivals in other countries.

Toyota plans to limit price adjustments to periodic reviews rather than directly reflecting tariff increases in its sticker prices, while Honda is also proceeding cautiously, considering price hikes only at the time of new model launches.

Meanwhile, Japan pledged $550 billion in US investment as part of last year's trade agreement, and has already unveiled large-scale investment projects totaling $36 billion in a first tranche and $73 billion in a second — though Jiji Press noted that other countries appear to be moving more slowly than Japan in fulfilling their own commitments.

A Japanese government official said the country has no choice but to "consistently follow through on the agreement" with the United States.

The global 10 percent tariff that the Trump administration imposed on trading partners worldwide following a court ruling that found its reciprocal tariffs unlawful is set to expire Friday, but the administration is moving quickly to introduce a replacement levy under Section 301 of the Trade Act — making it unlikely that US tariff pressure will ease anytime soon.