Japan's Car Industry Is Getting Hit By U.s. - China Trade War

Japan's Car Industry Is Getting Hit By U.S.-China Trade War

While it might not be directly implicated in it, yet Japan's automotive industry is feeling the heat of the ongoing trade war between the United States and China.

The Japan Times reports that automobiles and car parts comprise 60 per cent of the roughly US$1.38 billion a year in Japanese trade affected, despite Japan and the United States recently reaching a new trade agreement.

Sources say that a number of Japanese companies across different industries have moved production bases to Southeast Asia countries or Mexico, or increased domestic production and sales to mitigate the impacts of the U.S.-China trade war. Fortunately, many car manufacturers have extensive production bases and sales networks across the United States to limit the impacts.

Also Read: Japan-U.S. Reach Trade Deal With Assurances Autos Won’t Be Hit With New Tariffs

In late September, the United States and Japan came to an agreement about new tariffs not being imposed on vehicles imported in the U.S. from the Land of the Rising Sun. The deal, signed on the sidelines of the United Nations General Assembly by U.S. President Donald Trump and Japanese Prime Minister Shinzo Abe, included a reduction in tariffs on various agricultural products from the U.S. The Japanese government later stated that it will seek to eliminate the existing 2.5 per cent U.S. tariff on Japanese cars in the future.

There were concerns among Japanese automakers that President Trump would hit their cars with steep tariffs after it was determined that imported cars represent a threat to the nation’s national security.

Meanwhile, the ongoing U.S.-China trade war shows no signs of abating, with both sides continuing tit-for-tat tariffs.