Japan warns of ‘significant impact’ from US tariffs

Japan’s government warned on Thursday of a “significant impact” on its economic ties with the United States and global trade after President Donald Trump announced import tariffs on cars. Tokyo, a close economic and strategic ally of Washington, is one of the biggest investors in the US, with one in 10 Japanese jobs connected to the auto sector.

Trump announced on Wednesday that a 25 percent tariff would be imposed “on all cars that are not made in the United States,” effective 12:01 am (0401 GMT) eastern time on April 3. The move sparked concerns in Japan, given the country’s deep economic ties with the US and its major role in the American auto market.

Prime Minister Shigeru Ishiba, who last month held friendly talks with Trump at the White House, said Japan was reviewing an “appropriate” response. “Japan has made significant investments and significant job creation, which doesn’t apply to all countries… We are the number one (country) in investment in the United States,” Ishiba said.

He added that while Trump’s understanding of Japan’s economic contributions is improving, the situation remains fluid. “Various things are happening, so we are considering all kinds of countermeasures,” he noted.

Chief government spokesman Yoshimasa Hayashi went further, calling the tariffs “extremely regrettable” and warning of major effects on the global economy. “We believe that the current measures and other broad-based trade restrictions by the US government could have a significant impact on the economic relationship between Japan and the US, as well as on the global economy and the multilateral trading system,” Hayashi told reporters.

Following Trump’s announcement, shares of Japanese carmakers took a hit. Toyota’s stock was down 2.7 percent at midday, while Nissan shed 2.6 percent, and Honda dropped 2.7 percent. In South Korea, Hyundai shares dipped by 4.0 percent. A Honda spokesperson told AFP, “We need to study the impact of the tariffs on our businesses, then we will take measures to minimize the impact.”

The auto industry is a major pillar of Japan’s economy, with vehicles accounting for roughly a third of Japan’s 21.3 trillion yen ($142 billion) of US-bound exports in 2024. Earlier in March, Masanori Katayama, chair of the Japan Automobile Manufacturers Association (JAMA), warned that a 25 percent tariff “would have a negative impact overall on the economies of the United States and Japan.”

Japanese ministers have been lobbying their US counterparts to secure tariff exemptions for goods like steel and vehicles, but these requests have been denied. The Trump administration argues that levies will raise government revenue, revitalize American industry, and pressure countries on US priorities, but targeting imported cars could strain relations with key US allies.

Deputy Foreign Minister Takehiro Funakoshi spoke with US counterpart Thomas Landau on Thursday morning to convey Japan’s concerns over the tariff measures. The two sides agreed to continue working closely to strengthen the Japan-US alliance and promote a free and open Indo-Pacific based on the rule of law. Meanwhile, US Defense Secretary Pete Hegseth is scheduled to meet Japanese Defense Minister Gen Nakatani in Tokyo on Sunday.