U.S. Auto Giants Flag Competitive Concerns After Japan Tariff Deal

TradingKey - The United States' Big Three automakers have expressed concerns over the recent U.S.-Japan tariff agreement, fearing that the American auto industry might bear higher costs for steel, aluminum, and parts compared to its competitors, placing them at a disadvantage in the domestic market.

On Tuesday, Japan and the United States reached a consensus on tariffs, with the U.S. set to impose a 15% tariff on Japanese goods, including automobiles, while maintaining existing 50% tariffs on steel and aluminum. Matt Blunt, Chairman of the American Automotive Policy Council (AAPC), which represents General Motors, Ford, and Stellantis, argues that this agreement benefits Japanese automakers.

He noted that cars sold by Japan into the U.S. market contain minimal American parts yet receive lower tariff rates. In contrast, U.S. automakers face up to a 50% tariff on steel and aluminum imports and a 25% tariff on specific auto parts imports.

The White House explained that the tariff agreement with Japan would also remove regulations that hinder U.S. automobile sales in Japan. However, Blunt pointed out that foreign automakers hold a mere 6% share of the Japanese market, expressing skepticism about the potential impact on sales figures.

Furthermore, tariffs on cars from Canada and Mexico remain at 25%, with President Trump having threatened to raise tariffs on Mexican cars to 30% and Canadian cars to 35%. However, vehicles from Mexico and Canada contain a higher proportion of U.S.-made components and are closer to being "Made in America" than Japanese cars, yet they are subjected to higher tariffs. Blunt stated that this is a disadvantageous deal for American industry and U.S. auto workers.

Financial reports from U.S. automakers indicate the impact of tariffs. On Tuesday, General Motors disclosed in its Q2 earnings report that tariffs had resulted in an $11 billion loss, with expectations of a more severe impact in Q3. Following the news, General Motors' shares dropped over 8% during trading on Tuesday.

Nevertheless, the Big Three automakers experienced strong gains on Wednesday, with Stellantis closing up 11.54%, General Motors up 8.67%, and Ford up 1.7%. Analysts attribute this to the positive sentiment surrounding the U.S.-Japan agreement and the potential for a U.S.-EU agreement, as well as the companies' own profitability.

On Wednesday, when asked about the possibility of adjusting auto tariffs, the White House press secretary did not provide a direct response.