Unlock Editor’s Digest Lock for Free
FT editor Roula Khalaf will select your favorite stories in this weekly newsletter.
The Japanese Prime Minister said “all options” were under consideration, and South Korea has pledged an emergency response after Donald Trump announced 25% tariffs on car imports into the US and presented the ghost of the world trade war.
Comments from Isba to the Japanese Congress came when Trump’s latest trade salvo hit stocks in the automaker from Toyota to Stellantis to Ford. The Stoxx Europe 600 Automobiles & Parts Index fell 3% in early trading on Thursday.
Trump said the tariffs will come into effect on April 2, when Washington is expected to apply various tariffs to its US partners.
Automobile obligations are so far the most aggressive move in trade policy where chaotic developments have been marked by U-turns and rattling with investors.
“We need to think about the best options for Japan’s national interests,” Isba said. “We are looking at all options to get to the most appropriate response.”
Industry executives warned that Asian and European automakers will be hit hardest. Luxury manufacturers such as Jaguar Land Rover and Aston Martin have also been exposed considering they don’t make cars in the US.
As American trade partners competed to respond, South Korean Industry Minister Aan Duk Gaewoon said the country’s automakers would experience “substantial difficulties” due to tariffs and pledged to announce emergency measures next month following a meeting with industry executives on Thursday.
European Commission Chairman Ursula von der Leyen said later on Wednesday that the EU was also evaluating its options.
Analysts said the White House’s decision to impose obligations on imported auto parts and completed vehicles would increase damage to the automotive industry. According to a Bernstein survey, nearly half of vehicles sold in the US are imported, vehicles sold in the US are imported, and vehicles assembled in the US contain nearly 60% of foreign-made parts.
Sigrid de Vries, director of the European automotive industry group ACEA, urged Trump to “consider the negative effects of tariffs not only on global automakers but also on domestic US manufacturing.”
According to ACEA, European manufacturers export up to 60% of vehicles made in the US.
Japan is the largest exporter of completed vehicles to the United States since Mexico, the dominant manufacturer of Japanese companies. Japan sent $400 billion worth of cars to the US in 2024, accounting for 28.3% of its overall exports to the US.
Japanese spokesman Yoshimasa Hayashi described the tariffs as “very unfortunate.” He added that the Trump administration’s trade policy could have a major impact on bilateral ties, the global economy and the multilateral trading system.
Isba’s February meeting with Trump in Washington was initially hailed as a success to reaffirm the strength of the US alliance.
However, Tokyo traders said Isba’s sluggishness, along with the language of “all options,” suggested a rise in panic in Japan over the solidity of the relationship.
Japan has been lobbying Washington for tariff exemptions in recent weeks, highlighting its position as the largest supplier of foreign direct investment in the United States.
Recommended
The country’s economy minister visited Washington this month, but efforts have not secured the exemption Japan wanted.
“Since Japan is the biggest investor in the US, I think it makes sense for the (Trump administration) to apply uniform tariffs to all countries. That’s the point we’ve cultivated and we’ll continue to do so,” Isba said.
Trump said sudden tariffs would persuade foreign companies to build more cars in the US, boosting the country’s manufacturing industry.
Hyundai, which opened its doors on Thursday with Georgia’s $7.6 billion hybrid and electric vehicle plants, also announced plans to expand US production capacity in anticipation of Trump’s tariffs.
With additional reports from Kana Inagaki and Mari Novak of London
