US automakers say Trump's 15% tariff deal with Japan puts them at a
disadvantage
[July 24, 2025] By
JOSH BOAK and ALEXA ST. JOHN
WASHINGTON (AP) — U.S. automakers worry that President Donald Trump's
agreement to tariff Japanese vehicles at 15% would put them at a
competitive disadvantage, saying they will face steeper import taxes on
steel, aluminum and parts than their competitors.
“We need to review all the details of the agreement, but this is a deal
that will charge lower tariffs on Japanese autos with no U.S. content,”
said Matt Blunt, president of the American Automotive Policy Council,
which represents the Big 3 American automakers, General Motors, Ford and
Jeep-maker Stellantis.
Blunt said in an interview the U.S. companies and workers “definitely
are at a disadvantage” because they face a 50% tariff on steel and
aluminum and a 25% tariff on parts and finished vehicles, with some
exceptions for products covered under the United States-Mexico-Canada
Agreement that went into effect in 2020.
The domestic automaker reaction reveals the challenge of enforcing
policies across the world economy, showing that for all of Trump’s
promises there can be genuine tradeoffs from policy choices that risk
serious blowback in politically important states such as Michigan and
Wisconsin, where automaking is both a source of income and of identity.
The United Auto Workers said in a statement it was “deeply angered” by
the deal. “A better deal would have held Japanese automakers to the same
standards U.S. workers have fought for at GM, Ford, and Stellantis,” the
UAW said.
“If this becomes the blueprint for trade with Europe or South Korea, it
will be a major missed opportunity,” the union added. “We need trade
deals that raise standards — not reward the race to the bottom. This
deal does the opposite.”
Trump portrayed the trade framework as a major win after announcing it
on Tuesday, saying it would add hundreds of thousands of jobs to the
U.S. economy and open the Japanese economy in ways that could close a
persistent trade imbalance. The agreement includes a 15% tariff that
replaces the 25% import tax the Republican president had threatened to
charge starting on Aug. 1. Japan would also put together $550 billion to
invest in U.S. projects at the “direction” of the president, the White
House said.
The framework with Japan will remove regulations that prevent American
vehicles from being sold in that country, the White House has said,
adding that it would be possible for vehicles built in Detroit to be
shipped directly to Japan and ready to be sold.
But Blunt said that foreign auto producers, including the U.S., Europe
and South Korea, have just a 6% share in Japan, raising skepticism that
simply having the open market that the Trump administration says will
exist in that country will be sufficient.
“Tough nut to crack, and I’d be very surprised if we see any meaningful
market penetration in Japan,” Blunt said.
Asked at Wednesday's briefing about whether Trump's sectoral tariffs
such as those on autos were now subject to possible change, White House
press secretary Karoline Leavitt said that the issue had been going
through the Commerce Department.
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President Donald Trump speaks during a reception for Republican
members of Congress in the East Room of the White House, Tuesday,
July 22, 2025, in Washington. (AP Photo/Julia Demaree Nikhinson)
 The framework with Japan was also an
indication that some nations simply saw it as preferential to have a
set tariff rate rather than be whipsawed by Trump's changes on
import taxes since April. But for the moment, both Japan and the
United Kingdom with its quotas on auto exports might enjoy a
competitive edge in the U.S.
“With this agreement in place it provides Japan with a near-term
operating cost advantage compared to other foreign automakers, and
even some domestic U.S. product that uses a high degree of both
foreign production and parts content,” said Karl Brauer, executive
analyst at iSeeCars. "It will be interesting to see if this is the
first domino to fall in a series of foreign countries that decide
long-term stability is more important that short term disputes over
specific tariff rates.”
Autos Drive America, an organization that represents major Japanese
companies Toyota, Honda and Nissan and other international
automakers, said in a statement that it is “encouraged” by the
announced trade framework and noted its members have exceeded
domestic automaker production for the past two years.
The statement urged "the Trump administration to swiftly reach
similar agreements with other allies and partners, especially the
European Union, South Korea, Canada and Mexico.”
The Japanese framework could give automakers and other countries
grounds for pushing for changes in the Trump administration's
tariffs regime. The president has previously said that he values
flexibility in negotiating import taxes. The USMCA is up for review
next year.
Ford, GM and Stellantis do “have every right to be upset,” said Sam
Fiorani, vice president at consultancy AutoForecast Solutions. But
“Honda, Toyota, and Nissan still import vehicles from Mexico and
Canada, where the current levels of tariffs can be higher than those
applied to Japanese imports. Most of the high-volume models from
Japanese brands are already produced in North America.”
Fiorani noted that among the few exceptions are the Toyota 4Runner,
the Mazda CX-5 and the Subaru Forester, but most of the other
imports fill niches that are too small to warrant production in the
U.S.
“There will be negotiations between the U.S. and Canada and Mexico,
and it will probably result in tariffs no higher than 15%,” Fiorani
added, “but nobody seems to be in a hurry to negotiate around the
last Trump administration’s free trade agreement.”
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St. John contributed from Detroit.
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