The new tariff threats on Japan from U.S. President Donald Trump will pose heavy pressure on the Japanese economy and the entire automobile industry, said experts from different countries.
Earlier in July, Trump announced tariffs ranging from 25 percent to 40 percent on 14 countries. The new tariffs will take effect on Aug. 1.
Japanese exports to the U.S. will incur 25 percent tariff according to the announcement. Prime Minister Shigeru Ishiba said the levies would have an impact on the country, but stressed that negotiations continue.
Hidetoshi Tashiro, chief economist of Japan's Infinity LLC, underscored that foreign trade is an important pillar of Japan's economy, and as such the high tariffs proposed by Trump may cause a serious blow to Japan's economy.
"Once the 25-percent tariff is widely applied to other categories of goods, it will be a fatal blow to manufacturers in almost all industrial fields in Japan. In fact, this impact has already begun to appear. At present, many small and medium-sized enterprises that produce parts for large companies have lost orders. The problem is no longer 'may happen', but 'is happening'. This will have a devastating impact on Japan's overall economy," he said.
The Cabinet Office of Japan recently released the economic trends index for May, which showed that after seasonal adjustment, Japan's real GDP in the first quarter of 2025 fell by 0.2 percent month on month and 0.7 percent year on year. This is the first time in four quarters that Japan's GDP has shown monthly decline.
Jenny Town, senior fellow and director of the U.S.-based Stimson Center think tank, said in an interview that the trade policy is also linked to the defense projects between Japan and US.
"There's also enormous pressure on the defense side as well, and so I think both countries are now looking at this as more of a comprehensive package that includes defense interests, as well as trade interests, as well as sort of alliance management," she said.
Peter Holdmann, a management board member of ZF Group, a tech company in Germany, said the tariffs will also affect the U.S. market and the auto industry as a whole.
"We are skeptical at this point. The tariffs will only drive up car prices in north America, in the U.S. market in particular. The rising price will lead to a decline in sales. The main disadvantage of the entire tariff policy is that the production of automobiles will decrease. When the production decreases, we as suppliers can only reduce the supply of parts. The entire automobile industry will eventually be affected," Holdmann said.
US tariffs to harm Japanese economy, global auto industry: experts
