Japan Raises Concerns Over U.S. Auto Tariffs Despite Upholding Trade Pact

TOKYO — April 21, 2025 — Japanese Prime Minister Shigeru Ishiba confirmed that Japan intends to maintain the 2019 bilateral trade agreement with the United States, even as Tokyo expresses mounting concern over Washington’s recent imposition of tariffs on automobile imports.

The agreement, which was signed during former President Donald Trump's first term, reduced tariffs on a variety of goods including American agricultural products and Japanese machinery. Though the deal did not include specific provisions regarding the auto sector, assurances were reportedly given that Japanese vehicles would not be subjected to punitive tariffs under Section 232 a measure allowing tariffs on national security grounds.

At the time, then-Prime Minister Shinzo Abe had publicly stated that President Trump promised no additional duties would target Japanese car exports. "It was clearly confirmed between myself and President Trump that no extra tariffs would be applied," Abe said at a press briefing following the deal’s signing.

However, recent developments have seen the U.S. impose a 25% tariff on all foreign car imports a move Japan says contradicts the spirit of the 2019 agreement. Prime Minister Ishiba addressed parliament on Monday, stating, "Japan regards the latest U.S. actions with serious concern due to their inconsistency with the existing trade framework."

Despite the apparent conflict, Ishiba emphasized that Tokyo is not seeking to withdraw from the agreement. "Our position remains firm. We will continue to raise our concerns through diplomatic channels while honoring the agreement," he said.

Diplomatic efforts are already underway. Japan’s chief trade representative, Ryosei Akazawa, was in Washington last week to initiate a fresh round of talks. These negotiations are expected to cover complex issues such as non-tariff barriers and currency exchange dynamics.

Meanwhile, Japanese Finance Minister Katsunobu Kato is scheduled to visit the U.S. capital later this week. His itinerary includes a key meeting with U.S. Treasury Secretary Scott Bessent, where the state of foreign exchange markets will be on the agenda.

Market reactions have already reflected growing uncertainty. On Monday, the Japanese yen slipped to its lowest level in seven months, trading at 140.615 per dollar. The decline follows speculation that the U.S. may pressure Japan to take steps to bolster the yen, potentially as part of broader efforts to curb America’s widening trade deficit.

Though the 25% tariff on automobiles remains officially active, it has been temporarily suspended until early July. A 10% base tariff still applies to most imports, but the car industry a cornerstone of Japan’s export economy continues to face the highest level of duties.