On Thursday (Sept. 4), US President Donald Trump signed an executive order to reduce tariffs on automobiles and auto parts imported from Japan from the current 27.5% to 15%. The new tariffs will take effect seven days after the announcement of the executive order.
According to Reuters, the US and Japan have officially reached an agreement, easing the significant uncertainty that has plagued Japan's automobile industry since the US-Japan trade agreement was announced in July. However, South Korea's automobile industry has expressed concerns that the move could put them at a competitive disadvantage.
In return, the executive order reaffirms that the Japanese government has agreed to invest US$550 billion (approximately HK$4.3 trillion) in US government-selected projects. Japan has also committed to increasing its purchase of American rice by 75% and buying US agricultural products, including corn, soybeans, fertilizers, bioethanol (including sustainable aviation fuel), and other goods, totaling US$8 billion (approximately HK$62.41 billion) annually.
Previously, Japan had indicated that under the existing framework, the share of US rice imports could rise, but the agreement "does not sacrifice" Japan's agricultural sector. Additionally, Japan stated that the agreement ensures the lowest tariffs for Japanese semiconductors and pharmaceuticals in all agreements negotiated in Washington. However, the US executive order makes no mention of such treatment.
South Korea's Yonhap News Agency reported on Friday that Korean automakers like Hyundai and Kia, which compete directly with Japanese brands such as Toyota and Honda in the US market, are now concerned. While the US and South Korea previously reached a framework agreement, Trump has yet to sign the related executive order.
South Korean industry insiders noted that the 25% tariffs imposed on Korean vehicles have already placed immense pressure on the country's auto industry. With the US now lowering tariffs on Japanese vehicles, Korean automakers could face even greater challenges.
(Source: Wen Wei Po)
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