Source: Global Times

Although the Japanese government had made the revocation or reduction of car tariffs as its "top priority" in the months-long Japan-US tariff negotiations, it eventually received news that the US would impose a new 25% tariff on it starting August 1. Bloomberg reported on the 11th that Japanese automakers are rapidly lowering the prices of cars exported to the US at an unprecedented rate. Faced with the tariff attacks from President Trump, Japanese automakers are maintaining competitiveness at the cost of sacrificing profits. The Japan Times reported on the 11th that this strategy may weaken demand and further squeeze Japanese company profits. For Japanese automakers, the current situation is extremely severe.

According to the June corporate price index released by the Bank of Japan on the 10th, the export price of passenger vehicles to North America (in contract currency) was 86.8 (with 2020 as 100), a decrease of 19.4% year-on-year, marking the second consecutive month of nearly a 20% decline, which is the largest drop since 2016. After the US began implementing tariffs on imported cars on April 3, the Japanese passenger vehicle export price index fell by 8.1% in April and 18.9% in May. In contrast, the prices of passenger vehicles exported to regions outside North America did not show significant changes. In May, Japan's auto exports to the US fell by 24.7%, down to 363.4 billion yen (100 yen approximately equivalent to 4.9 Chinese yuan). The number of exported vehicles was 103,000, a decrease of 3.9% compared to the previous year. The average price per vehicle was about 3.54 million yen, a decrease of 21.7% compared to the same period last year. The reason for this situation is considered to be that Japanese automakers have chosen to lower prices to offset the increased tariffs in order to maintain sales in the US market. However, if the US continues to maintain high tariffs for a long time, the profits of Japanese automakers will inevitably be affected.

Although Japanese automakers have actively reduced prices, Japanese car brands in the US market have still been impacted by the tariff costs. According to the Japan Times, starting July 1, Toyota raised the US prices of its models by an average of $270 per vehicle, while the prices of its premium brand Lexus models were increased by $208. Mitsubishi responded to the tariffs by suspending deliveries of products from US ports to local dealers and raised the prices of some models by an average of 2.1%. The report stated that analysts said Japanese automakers could choose to build new factories in the US to avoid tariffs, which is exactly what the Trump administration claims its trade policy aims to achieve. However, new factories require substantial investment and several years to operate, and automakers also need to convince their suppliers to provide services for the new factory, reorganizing their global supply chain.

Prime Minister Shigeru Ishiba of Japan stated after Trump announced the new tariff rates that Japan's tariff negotiations with the US would not compromise, but various sectors in Japan are pessimistic about whether the US can ease car tariffs.

The Japan Times cited the analysis of Masaru Makino, chief economist at SMBC Nikko Securities, stating that the US seems unwilling to reduce car tariffs, otherwise it would not be able to solve the dilemma of the trade deficit with Japan, as car products account for 70% of the US trade deficit with Japan. In his view, the Japanese government may give up efforts to reduce car tariffs and instead seek to reduce tariffs on other items when negotiating with the US. (Pan Xiaoduo)

Original article: https://www.toutiao.com/article/7526747904742195753/

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