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Japan hits back as US mulls auto tariffs

Passenger cars make up around 30 percent of Japan’s exports to the US © AFP/File / Toshifumi KITAMURA

Tokyo, Japan, May 24 – Japan’s trade minister on Thursday pushed back against Washington for considering possible tariffs on automobile imports, a major driver of the Japanese economy.

Hiroshige Seko said the tariffs under consideration — reportedly as high as 25 percent — would disrupt the global market and go against the rules of the World Trade Organisation.

“If, only if, this measure were to be launched, it would be an extremely broad trade restriction measure. Such restrictive measures would plunge the world market into confusion,” Seko told reporters in Tokyo. “It is extremely regrettable.”

The reaction was unusually firm for an official from Japan, known for weighing diplomatic language very carefully.

Seko’s comments came after US Commerce Secretary Wilbur Ross announced he had initiated a so-called Section 232 investigation on auto trade.

The Wall Street Journal reported earlier Wednesday that US President Donald Trump was asking for vehicle import tariffs as high as 25 percent.

The US investigation could provide the legal basis to impose tariffs, if it finds imports threaten US national security.

“There is evidence suggesting that, for decades, imports from abroad have eroded our domestic auto industry,” Ross said.

The Trump administration used the same justification to impose steep tariffs on steel and aluminium, raising the spectre of a trade war.

The Japanese economy — the world’s third largest — relies heavily on exports to the US, particularly of automobiles, as a core driver of overall growth.

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Passenger cars make up around 30 percent of Japan’s total exports to the United States.

Japanese government data published on Monday showed that the country’s politically sensitive trade surplus with the US edged up in April.

Japan logged a surplus of 615.7 billion yen ($5.6 billion), up 4.7 percent after a 0.3 percent decline the previous month, driven partly by demand for cars.

Prime Minister Shinzo Abe has worked hard to befriend Trump, but Japan was not exempted from the steel and aluminium tariffs.

This prompted Tokyo to inform the WTO last week it had the right to impose tariffs worth 50 billion yen on US goods — equivalent to the impact of the US tariffs on Japanese steel and aluminium products.

The news has already had an impact on Japanese carmakers.

On the Tokyo stock exchange, Honda tumbled 2.81 percent, Toyota fell 2.63 percent and Nissan was off 1.62 percent, all underperforming the wider Nikkei market, which was down 1.22 percent.

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