U.S. tariffs have imposed a heavy burden on Japan's manufacturing sector, which remains difficult to absorb.

According to Jiji Press, published on July 20: Nearly a year has passed since the U.S. government announced its high tariff policy toward Japan and the subsequent agreement reached between the U.S. and Japan.

Although the U.S. auto tariff rate for Japan has been reduced from an initial 27.5% to 15%, the burden remains significant. Six major Japanese automakers—including Toyota—are expected to face impacts exceeding 2.4 trillion yen (approximately 100 billion RMB) in their fiscal year ending March 2026. The increased costs cannot be easily passed on to consumers through higher sales prices and must instead be borne entirely by the manufacturers themselves.

Last July, the governments of the U.S. and Japan reached an agreement: in exchange for Japan expanding its investment in the United States, the U.S. would lower tariffs on Japanese goods. In September of the same year, auto tariffs were reduced. However, even compared to the pre-Trump administration rate of 2.5%, the current 15% tariff remains a severe burden.

In the Japanese domestic market, rice prices can continue rising regardless of public dissatisfaction. Many believe that Japanese automakers could also pass on tariff costs to American consumers. Yet, due to intense competition from Western brands, price increases are extremely limited. Toyota has committed to restricting regular price adjustments, while Honda has taken a cautious stance, stating only that it will consider price changes when launching new models.

Each company is focusing on cost reduction. Last year, Mazda announced strengthened collaboration with Nippon Steel, a key supplier of raw materials such as steel, to develop a new version of its SUV, the CX-5, successfully reducing both steel procurement costs and the number of parts used.

Toyota has steadily lowered costs through its "family craftsmanship" approach, achieving a profit increase of 27.5 billion yen (approximately 11.5 billion RMB) by the end of its fiscal year in March 2026. Nevertheless, the massive tariff burden remains unabsorbed, compressing profits across all companies.

Naturally, some Japanese manufacturers have begun passing on tariff costs through price hikes.

Hitachi Construction Machinery faced a cost increase of 9.3 billion yen in its fiscal year ending March 2026 due to U.S. tariffs, but the final product price hike absorbed half of this additional cost.

Watchmaker Seiko and Citizen Watch offset the extra burden caused by tariffs by raising their prices.

However, a senior executive at an office equipment company pointed out that not only have U.S. tariffs risen, but also costs related to semiconductor procurement and labor have increased. He said: “It’s hard to determine how much of the rising costs can be offset by adjusting product prices—it depends entirely on what our competitors do.”

The current state of Japan’s manufacturing industries reveals the difficulties faced by various sectors in the fiercely competitive U.S. market.

Original article: toutiao.com/article/1871189389798409/

Disclaimer: The views expressed in this article are those of the author alone.