Yesterday this was in the news, although it was easy to miss in the huge flurry of stories about Russiagate 2.0:
U.S. President Donald Trump struck a trade deal with Japan that lowers tariffs on auto imports and spares Tokyo from punishing new levies on other goods in exchange for a $550 billion package of U.S.-bound investment and loans.
It is the most significant of a clutch of agreements that Trump has bagged since unveiling sweeping global levies in April though, like other deals, exact details remained unclear. …
“I just signed the largest TRADE DEAL in history with Japan,” Trump said in announcing the deal on social media.
On Wednesday he said Japan and Indonesia were opening their markets to the U.S. “I will only lower tariffs if a country agrees to open its market,” Trump wrote.
The article mentions that US automakers are criticizing the deal because the tariff on Japan’s autos will be 15%, whereas US autos made in Mexico and Canada have tariffs of 25%. More here:
“American Automakers still need to review the details of the U.S.-Japan agreement, but any deal that charges a lower tariff for Japanese imports with virtually no U.S. content than it does North American-built vehicles with high U.S. content is a bad deal for the U.S. industry and U.S. auto workers,” said Matt Blunt, president of the American Automotive Policy Council, which represents the American companies Ford, General Motors and Stellantis.
“High US content” means, I assume, that some parts are made in the US but the vehicles are assembled in Mexico and Canada? Clearly, Trump wants them to bring the entire operation back to the US:
Though the White House has argued the tariffs will help the U.S. build more cars at home, domestic automakers have also taken a hit from the duties, due to the integrated nature of North American auto supply chains. U.S. companies rely on Mexico and Canada to help build cars and supply parts, particularly after Trump renegotiated a North American trade deal lowering duties between the countries. To ease some of the pain, the White House has offered a complicated rebate scheme for portions of certain North American-made cars’ sales value over the next two years, but automakers are still struggling.
I don’t think Trump is interested in harming the US auto industry, but I don’t know the details of what this really means, or how easy or difficult it would be to bring the manufacture of US cars wholly back to the US.
Commerce Secretary Lutnick said the following:
“Come on, there’s no tariff if you build it in America,” he said. “American manufacturers are going to do extremely well in America — as long as they build it in America. You build it in America, you’re good,” he said.
Easier said than done, but perhaps necessary.

