US Automakers Express Outrage Over New Trade Deal with Japan
A recent trade agreement between the United States and Japan has sparked significant backlash from American automakers. President Donald Trump announced a deal to reduce tariffs on Japanese imports, including vehicles and auto parts, to 15 percent. This move marks a major shift from previous threats of imposing a 25 percent tariff on Japanese carmakers like Toyota, Honda, Subaru, Mazda, and Nissan.
The new agreement has been met with frustration by the Detroit Big Three — General Motors, Ford, and Stellantis (formerly Chrysler). These companies argue that the lower tariff rate gives their foreign competitors an unfair advantage. Matt Blunt, head of the American Automotive Policy Council, criticized the deal, stating it is a “bad deal for US industry and US auto workers.” He highlighted that the tariff on Japanese imports with minimal US content is significantly lower than the one imposed on vehicles built in North America.
The White House had previously framed the tariffs as a strategy to boost domestic manufacturing. However, US-based automakers claim the policy is having the opposite effect, negatively impacting their profits during a time when they are under pressure to expand operations within the country. For instance, General Motors reported a sharp $1.1 billion decline in income in the last quarter. The company expects to pay between $4 billion and $5 billion in tariffs this year. Similarly, Stellantis, which operates brands like Jeep, Dodge, Ram, and Chrysler, lost $2.68 billion in the first half of 2025 while paying $350 million in US tariffs.
Executives from these companies have pointed out that even with most production happening in the US, certain parts must be imported. Ford’s CEO, Jim Farley, explained that while 75 to 80 percent of parts in a $40,000 to $50,000 F-150 are made in America, some components such as fasteners, washers, and carpet are not available domestically.
Despite the push for job creation, the promised manufacturing job boom has yet to materialize. Combining May and June jobs reports, Americans lost 14,000 manufacturing jobs, even as other sectors added positions. President Trump, however, hailed the deal as a major victory, claiming it would create “hundreds of thousands of jobs.”
As part of the agreement, Japan will purchase 100 Boeing planes and increase defense spending with US firms by $3 billion annually. Last year, Japan spent $14 billion on defense projects with US manufacturing. Before the deal, Japanese companies were concerned about the impact of 25 percent levies, fearing higher consumer prices and job losses at US-based factories. Now, they appear to be clear winners, with Japanese car stocks surging on Wall Street. Toyota’s stock price rose 13 percent, while Honda, Mazda, and Nissan also saw significant gains.
However, car buyers may not see immediate relief. Erin Keating, an analyst at Cox Automotive, noted that even with lower tariffs, price hikes are still occurring. She pointed to rising “destination charges” tied to vehicle delivery since April, when Trump first introduced the automotive tariffs. With the upcoming refresh of 2026 model year vehicles, dealerships are expected to raise prices during the fall season.
Another factor contributing to the success of Japanese brands is their focus on affordable sedans. Toyota and Honda continue to offer popular models like the Camry and Civic, which remain top sellers for budget-conscious shoppers. In contrast, US automakers have reduced their sedan lineups, leaving a gap in the market that Japanese brands are filling effectively.
