New Article: Exposing the Myth of Japan Tariffs

It’s obviously becoming difficult to keep track of where the US government policy is on any particular day. Last week, it was ‘Liberation Day’, which included tariffs being imposed on remote penguin colonies in the back of nowhere, then Musk labelling the Trump’s trade adviser ‘dumber than a sack of bricks’, then tariffs on Chinese goods rising to 124 per cent (which will make then uncompetitive), then the ‘pause’ on reciprocal tariffs beyond the 10 per cent level … what will be next. These shifts and decisions are not exactly benign and the US Administration is displaying the sort of incompetence, capriciousness, flippancy – whatever you want to call it – that hardly befits the largest economic nation in the globe which has its tentacles spread far and wide. I was particularly interested though in the now infamous ‘Rose Garden Liberation Day’ speech Trump made last week (April 2, 2025) where he made claims about Japan, which were used to justify the imposition of 24 per cent tariffs on that nation. According to the President, Japan is among a host of countries that have “looted, pillaged, raped and plundered” the US. His evidence? None is available. The reality is that US cars don’t sell in Japan because they are inferior and ill-suited to the market. We explore that theme in this blog post.

Trump’s Claims and Evidence

Trump’s evidence for the ‘looting, pillaging, raping and plundering’ by Japan was, in his own words:

… perhaps worst of all are the non-monetary restrictions imposed by South Korea, Japan and very many other nations as a result of these colossal trade barriers … Eighty-one percent of the cars in South Korea are made in South Korea. 94 percent of the cars in Japan are made in Japan. Toyota sells one million foreign made automobiles into the United States and General Motors sells almost none. Ford sells very little. None of our companies are allowed to go into other countries …

But such horrendous imbalances have devastated our industrial base and put our national security at risk. I don’t blame these other countries at all for this calamity. I blame former presidents and past leaders who weren’t doing their job.

Debunking the Myth

So let’s answer his question in relation to Japan. The data shows that foreign vehicle imports jumped by 16 per cent in July 1978 when the tariff decision took effect. But in absolute terms the numbers were small. US cars just didn’t cut it in the Japanese market despite the now free entry. The thirst for cheaper Japanese imports by US consumers also meant that the trade balance worked in Japan’s favor. Management ineptitude is the reason the US car manufacturers cannot sell into Japan.

The Reality of the Auto Market in Japan

Most US cars simply would not fit down many of the Japanese streets. In Australia, there is a debate that US manufacturers and their local importers are pushing where local authorities are being pressured to redefine parking spaces in our cities to fit the monstrous SUV obsession. Japan will never have that debate. Further, Japan has stricter automobile standards than the US, especially in relation to safety and emissions. In Japan as in the EU and Australia and most places, a government agency provides the certification that new vehicles meet the required safety standards. In the US, there is self-certification by the manufacturers.

Conclusion

The long-standing “Japan tariff myth that just won’t die” is just another example of the fake way the US attempts to bully other nations to give preferential treatment to US corporations. In the case of Japan and the auto market – there is zero truth in the stuff that Trump and his mates are pumping out at present. No surprise there though.

FAQ

1. Why can’t US car manufacturers sell into the Japanese market?

The reasons US car manufacturers struggle to sell in Japan are related to the preferences of Japanese consumers, the size and specifications of US cars, as well as quality and cultural factors.

2. Are there trade barriers imposed by Japan on US car imports?

No, Japan has not imposed tariffs on car imports since 1978. The barriers that once existed have been dismantled, leaving US car manufacturers to face challenges in meeting the demands of the Japanese market.

3. What are the main differences between the US and Japanese automobile markets?

Japanese consumers prefer compact, fuel-efficient vehicles that are safe, reliable, and provide value for money. US car manufacturers have historically failed to produce cars that appeal to these preferences, leading to their limited success in the Japanese market.

(c) Copyright 2025 William Mitchell. All Rights Reserved.