It’s clearly turning into tough to maintain monitor of the place the US authorities coverage is on any explicit day. Final week, it was ‘Liberation Day’, which included tariffs being imposed on distant penguin colonies at the back of nowhere, then Musk labelling the Trump’s commerce adviser ‘dumber than a sack of bricks’, then tariffs on Chinese language items rising to 124 per cent (which can make then uncompetitive), then the ‘pause’ on reciprocal tariffs past the ten per cent degree … what might be subsequent. These shifts and selections will not be precisely benign and the US Administration is displaying the kind of incompetence, capriciousness, flippancy – no matter you wish to name it – that hardly befits the most important financial nation within the globe which has its tentacles unfold far and vast. I used to be notably although within the now notorious ‘Rose Backyard Liberation Day’ speech Trump made final week (April 2, 2025) the place he made claims about Japan, which have been used to justify the imposition of 24 per cent tariffs on that nation. Based on the President, Japan is amongst a bunch of nations which have “looted, pillaged, raped and plundered” the US. His proof? None is obtainable. The truth is that US vehicles don’t promote in Japan as a result of they’re inferior and ill-suited to the market. We discover that theme on this weblog put up.
Trump’s proof for the ‘looting, pillaging, raping and plundering’ by Japan was, in his personal phrases:
… maybe worst of all are the non-monetary restrictions imposed by South Korea, Japan and really many different nations because of these colossal commerce obstacles … Eighty-one % of the vehicles in South Korea are made in South Korea. 94 % of the vehicles in Japan are made in Japan. Toyota sells a million overseas made cars into america and Normal Motors sells nearly none. Ford sells little or no. None of our corporations are allowed to enter different international locations …
However such horrendous imbalances have devastated our industrial base and put our nationwide safety in danger. I don’t blame these different international locations in any respect for this calamity. I blame former presidents and previous leaders who weren’t doing their job.
I used to be excited by that declare as I’ve been performing some work on the evolution of the Japanese auto trade, which would seem to categorically refute the validity of the declare.
The US President adopted up the ‘Rose Backyard’ rant, with a gathering with the Prime Minister of Japan, Shigeru Ishiba and wrote on his Twitter Substitute that:
They don’t take our vehicles, however we take MILLIONS of theirs!
Then, on April 5, 2025, the White Home Deputy Chief of Workers for Coverage and Homeland Safety Advisor, proferred a Tweet (will we nonetheless name X messages Tweets?) that’s captured under (together with some reality checking from different individuals which is attention-grabbing).
The creator of this Tweet is clearly not the ‘sharpest instrument within the shed’.
His path to excessive conservatism was prompted by studying a gun management advocacy from the then boss of the NRA (Supply).
As I stated not the ‘sharpest’.
So let’s reply his query in relation to Japan.
I constructed the next desk from the latest knowledge printed by the – Japan Car Sellers Affiliation (JADA) – and it reveals new automobile gross sales in March 2025 (printed April 4, 2025) by producer and sort of passenger car (Regular, Small, Mild).
The Japanese producers accounted for 93 per cent of complete gross sales in Japan in March 2025.
52.1 per cent of the whole gross sales are in Small or Mild passenger vehicles and the US producers produce nothing in that vary.’
The US choices are additionally within the bigger class for which there’s very restricted (to say the least) demand within the home Japanese market.
Toyota, Honda and Suzuki account for 62.1 per cent of complete gross sales.
So in slender sense, Trump and his sycophants are appropriate.
The US producers have just about no foothold within the Japanese vehicle market, which is dominated by Japanese producers and demonstrates a majority choice to Small or Extremely Small (Mild) vehicles.
These little rectangular containers which are in every single place in Japan.
However the motive for that isn’t associated to restrictions imposed by Japan.
Ever since I used to be a pupil at College I’ve adopted the so-called commerce talks between the US and Japan.
The US angst about buying and selling with Japan goes again at the least that far.
There was the primary – Nixon Shock – on August 15, 1971, when US President Nixon appeared on nationwide tv and introduced that he was suspending the US-gold convertibility that was central to the Bretton Woods system of mounted change charges.
For Japan, which had been working commerce surpluses towards the US since 1965, the extra attention-grabbing side of Nixon’s announcement was the imposition of a ten per cent tariff on imports.
The Japanese authorities additionally didn’t need the yen to understand a lot as a result of that might worsen the affect on its exterior competitiveness from the tariff.
The yen was floated however the Financial institution of Japan intervened in overseas change markets to restrict the appreciation.
It was this determination that launched the time period ‘soiled float’ to the economics lexicon – courtesy of the West German Economics Minister, Karl Schiller who thought it was a retrograde technique by overseas governments to undermine Germany’s commerce place.
Quickly after, he ordered the Deutschbank to observe go well with (Supply).
Makes an attempt at restoring the mounted change price system (the so-called Smithsonian Settlement of December 1971) failed and by 1973 the Bretton Woods system was lastly laid to relaxation, though the European international locations continued with mounted charges for causes I defined in my 2015 e-book
– Eurozone Dystopia: Groupthink and Denial on a Grand Scale (printed Might 2015).
The US authorities understood that the Japanese authorities would do all the pieces to forestall the yen from appreciating an excessive amount of (of their eyes) and usually pumped inaccurate data (sure, faux information!) into the ‘markets’ about additional doubtless appreciation, which they then used as a bargaining lever to realize extra entry to the Japanese market.
Sure, Trump didn’t invent using deliberate international chaos as a bargaining chip.
The US pressured the Japanese authorities to permit extra imports into Japan from the US and limit exports from Japan into the US.
It’s a well-worn street.
The early Seventies ‘textile battle’ between the US and Japan was one other beachhead for the US authorities who demanded Japan limit their exports of “sure artificial and woolen textiles to america’ (Supply).
The Japanese textile producers refused to just accept quotas.
The US claimed the “The textile problem is a fuse … If it explodes there might be a hell of a variety of injury to issues beside textiles. If we’ve got an financial confrontation with Japan it could shortly unfold to politics as nicely. There’s a lot at stake.”
On the time, the textile trade was “Japan’s largest employer .. and accounted for some 10 per cent of Japan’s gross nationwide product”.
You may copy and paste China lately into textual content about commerce from the Seventies that talked about Japan.
The US has simply shifted ‘commerce enemies’.
Within the Sixties, as a part of the post-WW2 reconstruction of Japan, the Japanese authorities imposed tariffs in Japan for automobile imports – the ‘toddler trade’ justification.
On the time, the automobile producers in Japan have been small in scale and had not but achieved the unit prices that the big US producers had achieved.
Tariffs of between 30 and 40 per cent, relying on the scale of the automobile, have been put in place, along with home gross sales taxes on vehicles (of between 15 and 40 per cent).
Increased tariffs and taxes have been levied on bigger autos as a result of the Japanese needed to discourage buy of them for apparent causes (geography, density and many others), which, after all, labored towards the US producers.
So this was a serious level of disagreement between the US and Japanese governments within the early Seventies and was behind the US calls for that the yen be allowed to understand and that the Japanese authorities ought to introduce export controls.
By the mid-to-late Seventies, the Japanese producers had successfully run out of home demand for his or her autos and pressured the federal government to desert the export controls with an eye fixed to promoting extra into the big US market.
The political local weather within the US on the time (Carter as President) was firmly against commerce safety and as a consequence Japanese automobile exports into the US boomed.
Within the ensuing negotiations, the Japanese authorities deserted the tariff on automobile imports in 1977.
The information reveals that overseas car imports jumped by 16 per cent in July 1978 when the tariff determination took impact.
However in absolute phrases the numbers have been small.
US vehicles simply didn’t minimize it within the Japanese market regardless of the now free entry.
The thirst for cheaper Japanese imports by US customers additionally meant that the commerce steadiness labored in Japan’s favour (if you happen to suppose in mainstream phrases).
The OPEC shocks within the Seventies additionally basically altered the terrain for automobile producers.
In Australia, the massive 6-cylinder yank tanks disappeared nearly instantly from the streets in 1974-75 and customers shifted to smaller, Japanese constructed vehicles that had higher gas economic system.
Throughout Reagan’s presidency the tensions concerning the automobile commerce imbalance have been rehearsed usually.
Minimize and previous Trump for Reagan within the latter’s speeches and also you see the claims then have not likely modified.
With the import tariffs gone, the US consideration shifted into accusations about unfair commerce insurance policies of varied shapes and dimensions being utilized by Japan to maintain US merchandise out of the native market.
Because the US manufacturing sector declined, the narrative was all concerning the evil restrictions that the Japanese have been forcing onto US companies making an attempt to commerce in Japan, moderately than specializing in the managerial selections taken by the US companies.
The Japanese responded just by saying that Japanese customers have been disinterested within the massive ‘yank tanks’ that the US companies have been attempting to push into the home market.
Japanese customers needed small vehicles that have been fuel-efficient and got here with right-hand aspect steering.
The 2005 analysis by Donald Katzner and Mikhail Nikomarvo – Workout routines in Futility: Put up-Conflict Car-Commerce Negotiations between Japan and america – concluded that:
Certainly, the Large Three ignored the wants of each the Japanese and america automobile markets, and it was primarily this that prevented U.S. producers from advancing within the Japanese auto market and allowed the Japanese vehicle producers to ascertain a agency foothold in america …
Additional, the US have been oblivious to cultural features of Japanese life.
We be taught that:
However aside from refusing to supply acceptable vehicles within the Japanese market, there was one more reason why U.S. producers weren’t promoting many cars in Japan. For doing enterprise efficiently in Japan necessitates the institution of long-term relations between producers, wholesalers, and retailers. That system is grounded within the obligation-and-loyalty fundamentals of Japanese tradition … However American automobile producers weren’t prepared to take the time, power, and cash to enter into these relations in Japan and play the financial recreation in accordance with Japanese guidelines.
The US companies too shortly assume the position of the bully and suppose that all the pieces revolves round their ‘distinctive’ merchandise.
Nicely that strategy was by no means going to work in Japan.
A latest article within the Japan Instances (April 8, 2025) – The Japan tariff fantasy that simply received’t die – carried the sub-title “It’s no thriller as to why Japanese streets are empty of U.S. vehicles”.
It concluded that:
That GM and Ford promote little or no in Japan is true — GM shifted round 1,000 items within the fiscal yr ended final month, with Ford at fewer than 200. But the assumption that unfair commerce practices are at fault isn’t solely false, but in addition a type of enduring myths that refuses to die …
Tokyo hasn’t imposed tariffs on automobile imports since 1978. The nation certainly had obstacles to clear prior to now, however these haven’t existed for years. Different impediments have been damaged down since, leaving generations of lawmakers scratching their heads over U.S. complaints about market entry. The supply of their grievance is, in actuality, one thing far easier: The vehicles aren’t adequate.
American corporations have merely failed to supply vehicles that attraction to native tastes. Japanese drivers need compact, fuel-efficient autos that steadiness wonderful security and reliability with superior worth for cash.
Administration ineptitude is the rationale the US automobile producers can not promote into Japan.
If you happen to reside in Japan for any time period, it turns into apparent what the marketplace for cars seems to be like.
Plenty of these little rectangular vehicles buzzing across the slender lanes and being squeezed into all kinds of tight parking areas.
Most US vehicles merely wouldn’t match down lots of the Japanese streets.
In Australia, there’s a debate that US producers and their native importers are pushing the place native authorities are being pressured to redefine parking areas in our cities to suit the monstrous SUV obsession.
Japan won’t ever have that debate.
Additional, Japan has stricter vehicle requirements than the US, particularly in relation to security and emissions.
In Japan as within the EU and Australia and most locations, a authorities company offers the certification that new autos meet the required security requirements.
Within the US, there’s self-certification by the producers.
US foyer teams additionally complain about Japan’s zoning guidelines for motorized vehicle distribution and restore workshops, that are integral features of city planning in Japan and assist make their cities work higher.
However, calling these so-called ‘non-tariff obstacles’ a restraint on commerce that must be deserted is nonsensical.
If the US had its manner the remainder of the world would have interaction in a race to the underside on requirements that Japan and different nations discover important to sustaining a top quality society.
All producers must cope with these requirements and laws.
There may be little proof to help the declare that US producers are discriminated towards on this regard.
Firms like Mercedes, VW and BMW appear to have the ability to entry the Japanese market within the extremely selective ‘luxurious automobile’ market.
The Japan Instances article notes:
That’s why overseas manufacturers dominate the luxurious market: Mercedes-Benz Group bought greater than 50,000 autos final yr, whereas BMW and Volkswagen are additionally profitable. Whereas European vehicles have cultivated a high-end picture, American vehicles include an inferior status.
In closing, I believed this line from the Japan Instances article was actually good:
Paradoxically, it appears from complaints like Miller’s that the Trump administration, normally identified for its opposition to range, fairness and inclusion and different alleged “woke” initiatives, appears to not need equality of entry — however moderately fairness within the type of equal outcomes.
Conclusion
The long-standing “Japan tariff fantasy that simply received’t die” is simply one other instance of the faux manner the US makes an attempt to bully different nations to present preferential remedy to US companies.
Within the case of Japan and the auto market – there’s zero reality within the stuff that Trump and his mates are pumping out at current.
No shock there although.
That’s sufficient for as we speak!
(c) Copyright 2025 William Mitchell. All Rights Reserved.