Trump Offers Significant Tariff Relief to Japanese Automakers | Carscoops

      Prior to the Trump administration's return to power, tariffs were at a mere 2.5 percent.

      Due to a new trade agreement, auto tariffs will decrease from 27.5 to 15 percent. In return, Japan plans to increase its imports of agricultural products by 75 percent. Additionally, the Japanese government has committed to investing $550 billion in the United States.

      After protracted negotiations, the US and Japan have finalized a trade deal that offers some relief to domestic car manufacturers selling vehicles in the US. Specifically, while tariffs will stay in place, they will be reduced as Japan increases its imports from the United States.

      Recently, Japanese automotive manufacturers have faced tariffs of 27.5 percent. Now, most goods they export to the US will incur a standard 15 percent tariff, affecting automobiles and auto parts. This new tariff structure will take effect seven days after President Donald Trump signed the order on September 4.

      A survey by Nikkei Asia indicated that over 80 percent of Japanese automotive parts suppliers have passed on the increased costs due to these tariffs to their customers, with others contemplating similar actions. Before Trump's return to the White House, local vehicles and parts faced a much smaller levy of just 2.5 percent.

      The same report pointed out that in April, none of the surveyed companies had raised prices because of the tariffs, but after almost six months, many businesses can no longer absorb the increased duties.

      What Does The US Gain?

      In exchange for reducing the baseline tariffs to 15 percent, Japan will boost its acquisition of rice and agricultural goods, including corn, soybeans, fertilizer, and bioethanol, by 75 percent, a move valued at $8 billion annually.

      To promote the sale of US-made vehicles in Japan, the country will also eliminate the requirement for US cars to undergo additional testing, provided they meet safety certifications established in the US.

      Furthermore, the Japanese government has pledged to invest $550 billion in the United States, a decision that the Trump administration claims will create hundreds of thousands of jobs. Notably, the Trump administration will determine where Japan's investment will be directed.