[Source / Observer Network, Ruan Jiaqi]

As progress has been made in tariff consultations between the UK and US, as well as China and US, Japan, one of the first countries to initiate negotiations with the US, is now very anxious for fear that the hope of gaining a negotiation advantage might become slim. In order to reduce the US-Japan trade deficit, Japan is recalling an old strategy: importing cars produced by Japanese automakers in the US back to Japan.

According to a report by Japan's Daily News on the 14th, the Japanese government is internally discussing the feasibility of this plan regarding the Trump administration's tariff measures. The report mentioned that the Japanese automobile industry heavily relies on the US market, but during the past two rounds of negotiations, the US side has consistently refused to grant exemptions to Japan, insisting on imposing a 25% tariff on all imported vehicles. The Japanese side hopes this move will soften the US stance.

A Japanese negotiator said, "Japan exports approximately 1.37 million vehicles to the US annually, so we have no choice but to appeal for tariff reduction in this way."

The Daily News noted that during the Japan-US trade friction period in the 1990s, to cope with US trade restrictions and balance the trade deficit, Japan had once adopted this "reverse import" strategy.

At that time, the US imposed strict restrictions on Japanese car imports and required Japan to increase imports of American cars to reduce the trade deficit. To alleviate pressure, Japanese automakers began building factories in the US to produce cars, while also exporting some right-hand drive models produced in the US back to Japan through simplified import procedures.

Some models even became best-sellers at the time. For example, the Accord coupes produced by Honda in Ohio, USA, were very popular in Japan due to their right-hand design and configurations meeting Japanese market demands.

In fact, to this day, many Japanese automakers still use the "reverse import" strategy. However, since 2010, Honda, Suzuki, and other Japanese companies have instead imported cars from emerging markets like India and Thailand, taking advantage of the cost advantages there.

Thanks to the establishment of high-quality parts supply chains in emerging markets, in 2024, Japan's reverse import volume of automobiles reached a record high, increasing by 48% year-on-year to about 93,600 units, accounting for approximately 2% of Japan's total new car sales. These reverse-imported cars mainly came from India and Thailand, while the volume of US-produced models reverse-imported significantly decreased, focusing mainly on specific segments such as luxury vehicles and SUVs.

The Daily News reported that precisely because of the past success with the "reverse import" strategy, this historical approach was brought up again. But times have changed. A Japanese government official pointed out, "(Currently) domestic demand for American cars in Japan is limited, and the three major automakers (Toyota, Honda, Nissan) are not putting enough effort into sales."

Japanese economist Takeshi Monzen also stated that the past success of reverse-importing Japanese cars from the US was partly due to the appreciation of the yen at the time, which lowered the price of Japanese cars imported from the US denominated in yen; secondly, the labor cost gap between Japan and the US was not significant at the time. However, the situation is completely different now, and blindly following the old strategy would only lead to "Japanese consumers being forced to buy unnecessary expensive American-made Japanese cars."

In addition, reverse imports may also have negative impacts on Japan's domestic automotive industry. Shigetsugu Fukao, an automotive analyst and senior researcher at Tokyo's Itochu Research Institute, frankly stated, "With the improvement of manufacturing levels in India and Thailand, apart from job protection, the significance of producing cars in Japan is greatly reduced."

Moreover, even if Japan proactively proposes to adopt this old strategy, it is difficult to assess how much concession the US side might make. In the preliminary agreement reached with the UK, the US agreed to lower the tariff on the first 100,000 vehicles exported annually from the UK to the US to 10%, with the remainder still subject to a 25% tariff. Whether this clause applies to Japan remains unclear.

May 1st, Besent and Akira Akazawa held US-Japan negotiations in the US. Kyodo News

Japanese media reported that Japan, which has always sought full tariff exemption from the US, is currently facing an extremely severe situation. Not only does Japan need to renegotiate so-called "parity tariffs" with the US side, but it also needs to separately handle the 25% additional tariff on cars and related products. These factors may make prolonged negotiations inevitable.

Kyodo News reported exclusively on the 6th that during the US-Japan negotiations, the US side refused to cancel the 24% "parity tariff" imposed on Japan and also refused to cancel the 10% "benchmark tariff" that was suspended. Meanwhile, the US side showed no intention of discussing tariffs on cars, steel, etc., and limited discussions to lowering the "parity tariff."

Kyodo News reported that the US attitude towards not giving special treatment to Japan is clear. It is expected that concentrated negotiations starting mid-May will face numerous difficulties.

Automobile manufacturing is a pillar industry of Japan's economy. The US's imposition of tariffs on imported vehicles not only affects Japan's auto industry but may also impact its economy.

In 2024, Japan exported approximately 1.37 million vehicles to the US, accounting for more than 30% of its total exports. Statistics from the US Department of Commerce also show that among passenger vehicle imports by country, Japan is the second-largest source of auto imports to the US after Mexico.

According to estimates by Nomura Research Institute, the US tariff policy will cause Japan's actual GDP to decrease by 0.59%. On May 1st, the Bank of Japan announced that it would revise downward its GDP growth forecast for fiscal 2025 from 1.1% projected in January to 0.5%.

Bloomberg reported on the 14th that Toyota could become "the biggest loser in the global automotive industry" amid the US tariff turmoil. "Bloomberg Intelligence" data analysis suggests that the company's losses for the entire fiscal year may reach as high as $10.7 billion. In just the past two months, Toyota has already seen a profit decline of $1.2 billion.

Nissan and Honda are also expected to suffer respective losses of around $3 billion. Nissan has suspended its profit forecast for the year and stated that it may incur an operating loss in the first quarter.

The New York Times reported on the 13th that although the pain from failed diplomatic efforts is becoming increasingly evident, as the US's largest ally in Asia, Japan still eagerly seeks to advance trade negotiations with Washington.

"Different countries are in different positions and circumstances, so their negotiation timetables and agreement contents naturally vary," Japanese Minister for Economic Revitalization and Chief Trade Negotiator Akira Akazawa insisted when facing reporters on May 13: "The US considers us extremely important. My understanding is that this has not changed."

This article is an exclusive contribution from the Observer Network and cannot be reprinted without permission.

Original: https://www.toutiao.com/article/7504567003845067315/

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