Fast-track localization and manufacturing in the U.S. to avoid tariffs: Calbee's CEO
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Mitsubishi Electric to Transfer Shares of Insurance Subsidiary to Marsh Japan
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CNBC
6 hours ago
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Fast-track localization and manufacturing in the U.S. to avoid tariffs: Calbee's CEO
Calbee's President and CEO Makoto Ehara talks about the 15% tariff on Japanese goods and the steps that the Japanese snack food company is taking to mitigate its impact.
CNBC
7 hours ago
- CNBC
Trump's tariff deal offers scant relief for Japan automakers as bigger threat looms
Japanese automakers may have sidestepped crushing U.S. tariffs, but the reprieve is offering little comfort as Chinese automakers erode their long-held global edge, complicated by persistent structural challenges at home. On July 22, U.S. President Donald Trump announced that auto tariffs on Japan-made vehicle imports to the U.S. were lowered to 15% from the current 25%. However, the light isn't at the end of the tunnel just yet, industry experts cautioned. "The trade deal struck with the U.S. is certainly a relief in that it offers some certainty that U.S. tariffs on Japan-made cars won't rise to punitive levels," said Stefan Angrick, head of Japan and Frontier market economics at Moody's Analytics. "But I'd hesitate to call it good news. A 15% U.S. import tariff is still significantly higher than where Japan started. And a 15% tariff is certainly a higher rate than most had expected." The larger challenge, analysts say, comes from China's meteoric rise in the global automotive industry. Once an important growth market for Japanese brands, China has transformed into a dominant competitor. A key challenge for Japanese producers is the intensifying competition from China, Angrick said. China's push into advanced manufacturing has transformed it into a formidable competitor just as domestic demand for Japan-made cars began to soften, he added. Seconding his view is Karl Brauer, executive analyst at iSeeCars, who noted that lower-cost Chinese vehicles remain the "single biggest threat" to Japan's auto industry and economic outlook. China is the world's largest car producer and exporter, particularly of electric vehicles. The country's growing dominance in critical components and EV innovation is increasingly squeezing foreign automakers. Chinese automakers have also been making significant inroads into Southeast Asia — a region long dominated by Japanese brands like Toyota, Honda, and Nissan — making it an uphill battle for Japanese automakers to maintain their once-unassailable global market share. According to a 2025 report by PwC, the market share of Japanese auto manufacturers in Indonesia, Malaysia, Thailand, the Philippines, Vietnam and Singapore, commonly referred to as ASEAN-6, fell from 68.2% in 2023 to 63.9% in 2024. "[China autos] are expanding into markets where Japanese firms used to have a strong foothold. Thailand is one example," said the Moody's Analytics' expert. Beyond Southeast Asia, Japan's second-largest car export market is also being contested by China: Australia. A recent study commissioned by the Australian Automotive Dealer Association predicts that China is poised to surpass other countries as Australia's leading source of vehicle imports within the next decade. By 2035, 43% of all imported vehicles in Australia are expected to be manufactured in China, up from the expected 17% in 2025, the report suggested. By contrast, Japanese imports are expected to fall from 32% in 2025 to 22% by 2035. Besides external competition, Japan's automotive sector is contending with domestic economic challenges, including high inflation and weak consumer spending — similar to other developed large automakers like Toyota continue to find success domestically, Nissan is especially vulnerable due to the growing threat from China's automotive industry, Brauer explained. Earlier missteps by the management and planned plant closures are compounding its woes. Nissan plans to shut down seven of its 17 plants by fiscal 2027 and reduce its global workforce by around 15% as part of a restructuring plan. "All in all, the outlook for Japan's car industry is very challenging," Moody's Angrick said. While Toyota's global scale and diversified manufacturing footprint give it a relative advantage in maneuvering said challenges, smaller automakers such as Subaru and Mazda are under more pressure, noted Mio Kato, founder of Lightstream Research. While Subaru and Mazda do face a "significantly higher burden," they do have an advantage in having strong ties to Toyota, said Kato. Mazada, for one, shares a joint plant with Toyota, while Subaru is teaming up with Toyota to manufacture a co-developed electric vehicle slated for a 2026 debut. In the long term, Kato believes that these partnerships could deepen, potentially leading to a more formal consolidation under Toyota's umbrella. "I wouldn't expect [a consolidation] to happen on a short-term timeframe. However, it is certainly something for them to consider when you start looking towards the end of the decade, perhaps," he said. Still, analysts acknowledge that Trump's finalized tariff rate brings at least one benefit: some predictability. While it is still too soon to fully infer the long-term impact of the new trade agreement between the U.S. and Japan, having a confirmed tariff agreement will allow Japanese automakers to know their pricing and cost structures going forward, experts echoed. However, it remains unclear what tariff rates other automakers will face. "I think the absolute case for Japan is now understood relatively well, but in terms of how their competitiveness shifts, versus say, autos manufactured in Korea and exported or from Mexico and Canada, that could still impact the profit outlook for Japanese auto companies," Kato said.
