Just days later, U.S. president Donald Trump announced tariffs on imported vehicles would be scaled back, a historic rollback of tariffs. This action prompted a boom in Japanese auto stocks. Ironically, the news was announced on March 26, the same day that Trump announced a new 25% tariff on all foreign-made vehicles, to start on April 2. To the shock and delight of many, news leaked last week that a big change was coming. The tariff on Japanese cars will be reduced from 25% to 15%.
In reaction to news of the down-tariff, stock prices of all three major Japanese automakers soared. Toyota’s stock already had risen more than 11 percent, and Honda shares had soared more than 8 percent. The cut in tariffs is extremely important for the Japanese auto industry. In 2024, auto exports to the U.S. are predicted to account for 28.3% of Japan’s global shipments. These targeting reductions that have been enacted will help to improve competitiveness and drive sales in one of the world’s largest and most important automotive markets.
The new 15% tariff is aimed squarely at Japanese automakers. It’s not yet clear whether this reduction will extend to other manufacturers globally. The ambiguity of the administration’s tariffs has caused widespread debate among industry analysts as to how these tariffs would affect foreign competitors.
Beyond the bullish Japanese automakers reaction, the mood was mirrored in South Korean shares as well. Hyundai’s shares rose by more than 6%, and Kia’s shares climbed a more modest 0.2%. Beyond the specifics here, these developments indicate a broader trend of relief on the automotive manufacturers’ side related to changing tariffs.
The tariff cut is part of a larger deal between the United States and Japan. Japan promises to open its market beyond the scope of this deal to a greater variety of U.S. goods. It permits a limited number of U.S. automobiles, trucks, rice, and other agricultural products tariff- and quota-free access to the Japanese market. This measure is intended to bolster trade ties between the two countries while making the easy flow of goods more effective and efficient.