【By Observer Net, Qi Qian】CCTV News reported that on July 22, US President Trump announced a trade agreement between the US and Japan: the US will impose a 15% tariff on Japanese imports, and Japan will invest $55 billion in the US and open up its markets for cars, rice, etc.

When the news was released, Trump could not contain his excitement, calling this agreement "the biggest deal in history." However, the next day (local time 23rd), American car manufacturers collectively complained that the 15% car tariff would boost foreign automakers like Japan, putting American companies at a disadvantage.

A US automotive industry lobbyist said the US-Japan agreement was "another abandonment of the American automotive industry."

American Companies Discontent: Japanese Automakers Face Lower Tax Rates

It is known that Trump imposed a 25% tariff on all foreign automakers in early April, which applies to cars produced by American companies using imported parts. By reducing the tariff on Japanese cars and parts to 15%, it means some American companies' cars may face higher tariffs than those entirely produced overseas.

American automakers are also worried that the new US-Japan agreement gives other countries hope that lowering car tariffs is possible, as this has been a problem in negotiations with major trading partners such as the EU and South Korea. American companies are uneasy about this. They warned that given the complexity of the North American automotive supply chain, the issue of the US government lowering car tariffs would harm the domestic industry.

"American car manufacturers still need to review the details of the US-Japan agreement," said Matt Blunt, chairman of the US Auto Policy Council representing Ford, General Motors, etc., "This is detrimental to the American industry and American auto workers because the transaction imposes a lower tariff on Japanese imported cars that have very few American parts, while imposing a higher tariff on cars produced in North America with higher American parts."

US Treasury Secretary Brian Deese said in an interview on the 23rd that the decision to lower the tariff on Japanese cars was attributed to Japan's large-scale new investment proposal. He doubted whether other countries could replicate this model.

In February this year, Trump met with visiting Japanese Prime Minister Ishiba in the White House. Screenshot of the tweet

However, a US automotive industry lobbyist said that Commerce Secretary Rutenberg has been proposing similar deals to the EU and South Korea, both of which have large and influential automotive industries. Four EU diplomats confirmed that the EU is negotiating a deal with the US that would set tariffs at 15%, including car tariffs, similar to the Japan agreement.

"This is another abandonment of the American automotive industry," said the lobbyist, commenting on the US-Japan trade agreement.

According to reports, although the White House claims that the tariffs will help American companies produce more cars domestically, due to the integrated nature of the North American automotive supply chain, where American companies rely on Mexico and Canada to help produce cars and supply parts, American domestic automakers are being hit by tariffs. To ease some pressure, the White House provided a complex refund program, but American automakers are still struggling.

General Motors reported on the 22nd that due to the impact of tariffs and other factors, the company's second-quarter profit fell by $1 billion, and it warned that losses in the next quarter would be higher. Stellantis Automobile Company announced earlier this week that it expects a loss of $2.7 billion in the first half of 2025. Tesla stated on the 23rd that its profits for the quarter declined due to a drop in vehicle deliveries and tariffs.

White House Officials Reassure: Japan Is an Exception

For American car manufacturers, if other major trading partners follow Japan's example and successfully negotiate more favorable tariff rates for their own automakers, they will face even greater losses in the future. According to observations, after the US-Japan trade agreement was reached, Toyota and Honda stock prices surged, and the stock prices of South Korean and European automakers also rose.

Trump's car tariffs have been a sticking point in trade negotiations with the EU for months. According to reports, Germany strongly pushed the EU to make significant concessions to Trump to give its large automotive manufacturing industry a breather. German car companies saw a double-digit decline in exports to the US in April and May. Additionally, Swedish carmaker Volvo had to suspend sales of certain cars in the US.

"Our companies have incurred billions of dollars in costs, and it continues to increase every day," said Hildegard Müller, president of the German Association of the Automotive Industry (VDA), "The damage to previously normal supply chains is huge, and it must not be allowed to expand further."

South Korean carmakers Hyundai and Kia will release their second-quarter financial results later this week, and both companies expect significant losses due to tariffs. US official data shows that over the past 20 years before Trump took office, South Korea's car exports to the US increased sharply, rising from $8.7 billion in 2005 to $37.3 billion in 2024.

Like Japan and the EU, tariffs have been a focal point of South Korea's trade negotiations with the US. The Trump administration was dissatisfied with the slow progress of the talks. On July 7, Trump wrote to the new South Korean president, Yoon Suk-yeol, threatening to impose a 25% tariff on all South Korean exports to the US.

However, a person who knows the situation of discussions between the Trump administration and US auto giants revealed that after the implementation of the car tariffs in April, the Trump administration had assured American car manufacturers that the car tariffs would not become a bargaining chip in other trade negotiations.

"I won't make such car deals with other countries," Trump said in a speech on May 8, trying to make the UK agreement an exception. This agreement reduced the tariff on the first 100,000 cars and car parts entering the US to 10%. He said that Rolls-Royce in the UK is "a very special car, and the quantity is also limited, not a giant car company that produces millions of cars."

A White House official on the 23rd downplayed the prospects of Trump lowering car tariffs for more countries. The official said, "This is a negotiation," and pointed out that Japan made an unparalleled proposal, including a planned investment of $55 billion in the US.

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