US Tariff Threat on Canadian Cars Could Hit Japanese Automakers Hard
A Japanese economist says Trump's proposed 50% tariff on Canadian cars could severely impact Japanese automakers relying on USMCA trade terms.
A prominent Japanese economist has warned that the proposed steep increase in US tariffs on automobiles imported from Canada could deliver a major blow to Japanese car manufacturers. The warning follows an announcement by former US President Donald Trump that tariffs on cars, automotive parts, and steel from Canada would rise to 50 percent, effective January 1, 2027.
Hidetoshi Tashiro, chief economist at Japan's Infinity LLC, explained that Japanese automakers have established a significant presence in Canada's automotive sector. Their business model relies heavily on exporting vehicles manufactured there to the vast US market, a practice facilitated by the United States-Mexico-Canada Agreement (USMCA). This trade pact currently allows cars produced in Canada and Mexico to enter the US either duty-free or with substantially reduced tariffs.
Tashiro noted that if this agreement becomes invalid or is undermined, the consequences for Japan's automotive industry could be nearly fatal. He added that a growing number of Japanese companies are already beginning to reassess their supply chains and global strategies in response to the shifting trade landscape.
According to the economist, the US market no longer holds the overwhelming dominance it once did. From an economic perspective, he suggested that Japanese automakers are now highly likely to pivot their global operational focus from North America toward East Asia, with China at its center.