Japan to strongly advocate for exemption from U.S. auto tariffs

Japan’s Prime Minister Shigeru Ishiba announced on Tuesday that Japan will continue to strongly push for the United States to exempt it from auto tariffs. He also vowed to take the necessary steps to mitigate the damage U.S. tariffs will cause to the economy and jobs.

Japan expects a severe hit from the planned 25% tariff on automobile imports unveiled last week by U.S. President Donald Trump. On Wednesday, Trump also promised to announce that reciprocal tariffs would target every country.

Japan pushes for exemption from U.S. auto tariffs

Japan will keep up a strong push for the United States to exempt it from auto tariffs, Prime Minister Shigeru Ishiba said on Tuesday, while vowing to take the necessary steps to cushion the blow to the economy and jobs.

— Ajay Bagga (@Ajay_Bagga) April 1, 2025

Japan’s Prime Minister revealed that the country was prepared to push for the United States to exclude it from auto tariffs. Ishiba also highlighted that Tokyo will take the necessary steps to prevent setbacks to the economy and jobs.

President Donald Trump announced last week he will impose a 25% tariff on imports of automobiles and certain automobile parts, with processes to expand tariffs on additional parts if necessary. He noted that importers of automobiles under the United States-Mexico-Canada Agreement will have 25% tariffs applied only to the value of their non-U.S. content. Trump also promised to announce on April 2 reciprocal tariffs targeting every nation.

The Prime Minister told a news conference that measures such as offers of funding support to cash-strapped firms were among those the government could consider to protect the economy from the higher tariffs.

“The government will negotiate with the ruling coalition at an early date specific measures we can take to respond.”

~ Shigeru Ishiba, Prime Minister of Japan.

Ishiba acknowledged that government agencies were negotiating with U.S. counterparties to secure more details on Washington’s tariff plans. He also added that he “would not hesitate” to visit the United States again to voice a direct call for exemptions.

Ishiba has also been grappling with sliding approval ratings ahead of an upper house election expected in July. The country’s PM has been under pressure to counter economic constraints from U.S. tariffs and shield households from rising costs of living. Japan’s inflation of 3.7% in February was among the highest in advanced economies, fueled by steady rises in food costs such as those of staple rice.

Ishiba noted that the country’s big companies have offered bumper pay hikes in this year’s wage talks with unions, but it remains uncertain if smaller firms will follow suit, as Trump’s tariffs could threaten business expectations.

The country’s senior official highlighted that the government would compile measures by May to push up Japan’s minimum wage. He also said a separate package by June will allow smaller companies to smoothly pass on rising costs.

Ishiba noted that “achieving wage hikes is at the core of our growth strategy.” He also stressed the need for pay hikes sufficient to compensate for the rising cost of living.

Ishiba plans to mull what’s best for national interest

Prime Minister Ishiba revealed on Thursday last week Japan will put “all options on the table” in dealing with Washington’s announcement to impose a 25% tariff on automobile imports. He argued that Japan is a country that is making the largest amount of investment in the United States. Ishiba told parliament that “We wonder if it makes sense for Washington to apply uniform tariffs to all countries.” The country’s official also said that Japan needs to consider what’s best for its national interest without elaborating on the possible steps Tokyo may take.

The Ministry of Finance data revealed Japan’s automobile imports made up 28.3% of total exports to the United States in 2024, the biggest ratio among all items. The auto sector constitutes roughly 3% of Japan’s gross domestic product (GDP) and has been the driver of recent wage hikes.

Executive economist at Nomura Research Institute (NRI) Takahide Kiuchi expects the 25% U.S. auto tariffs to push down Japan’s GDP by around 0.2%. Kiuchi maintained that the Trump tariff has the potential to immediately push Japan’s economy into deterioration.

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