Japanese automakers relieved with lower US tariff

The cut in the tariff rate to 15 % from 27.5 % is a "big step," a Japanese auto industry executive said.

But the rate itself is much higher than the 2.5 % before US President Donald Trump returned to office. An official at a major Japanese automaker said that the industry cannot be fully happy, given the impact on small and midsize suppliers.

Goldman Sachs lowered its estimate for the tariff impact on seven major Japanese automakers from 3.47 trillion yen to 1.89 trillion yen because of the reduction in the rate.

The companies can save 500 billion yen more if they cut costs and raise vehicle prices in the US market, the investment bank said.

An economist said that Japanese automakers will take a competitive advantage in the US market because the tariff rate they face is lower than that on imports from Europe and South Korea.

But the auto industry has many suppliers. An automaker executive said that the tariff "could put a heavy burden on small and midsize companies."

Referring to the 15 pct US reciprocal tariff on Japanese goods, Yoshiharu Inaba, an adviser at the Japan Machine Tool Builders' Association, said it is "not a level that firms can absorb."

Toshiba Corp. said that it will consider passing on higher costs to customers.

Takeshi Niinami, chairman of the Japan Association of Corporate Executives, said, "The trend of US policy to prioritise its own needs won't change in the future." He called for boosting supply chains and international cooperation.

[Copyright The Jiji Press, Ltd.]