Japan calls Trump’s 24% tariff ‘extremely regrettable’, pushes for exemption

TOKYO – Japan’s Trade Minister Yoji Muto said the Trump administration’s latest broadside on tariffs is “extremely regrettable” and pushed for an exemption, hours after the United States

announced new levies

on Japan that were higher than expected.

Japan will be subject to a 24 per cent across-the-board tariff starting next week, US President Donald Trump said on April 2 in Washington, just hours before a previously announced 25 per cent levy on all car imports was set to go into effect.

“We’ll continue to urge the US to exempt Japan from these tariffs,” Mr Muto told reporters on April 3 in Tokyo. “We’ll check the details of the tariff measures, assess the impact on the domestic economy, and do our best to take necessary steps.”

Mr Muto said he had explained to US Commerce Secretary Howard Lutnick “how the US tariffs would adversely affect the US economy by undermining the capacity of Japanese companies to invest”.

“We had a frank discussion on how to pursue cooperation in the interest of both Japan and the United States that does not rely on tariffs,” he said.

Government spokesman Yoshimasa Hayashi also said that the US measures may contravene World Trade Organisation (WTO) rules and the two countries’ trade treaty.

“We have serious concerns as to consistency with the WTO agreement and Japan-US trade agreement,” he told reporters.

Asked if Japan will impose retaliatory tariffs or is considering filing a suit to the WTO, Mr Hayashi said: “We decline to disclose details of our considerations.”

While there are nations that are set to be hit with higher tariffs, the levies against Japan are more than many had expected.

It is higher than the European Union’s 20 per cent, and more than double the 10 per cent baseline tax applied to all nations, despite promises from Japan to boost investment into the US to US$1 trillion (S$1.3 trillion).

Japan has refrained from taking retaliatory steps against previously announced auto tariffs.

Nomura Research Institute estimated that Mr Trump’s “reciprocal” tariffs may reduce Japan’s annual growth rate by 0.59 percentage point.

The new levies are set to take effect on April 9, after the 10 per cent baseline charge on every nation takes effect after midnight Saturday.

“Japan – very very tough,” Mr Trump said in Washington on April 2. “They were charging us 46 per cent and much higher for certain items like cars, you know little items like cars, 46 per cent. We’re charging them 24 per cent.”

Mr Trump was referring to the tariff level that the US perceives as Japan putting on America, although the full calculation method for reaching that number was not immediately clear.

Japan does not charge tariffs on US car imports, but US carmakers have long complained about perceived non-tariff barriers, including stringent safety standards.

A report by the US Trade Representative issued on March 31 outlined a number of areas of US concern, including cars, digital markets and pharmaceuticals.

Japanese leaders, including Prime Minister Shigeru Ishiba, have repeatedly called for an exemption from the tariffs, citing the country’s standing as the biggest investor in the US.

Mr Ishiba also pledged to buy more US liquefied natural gas during a February summit with Mr Trump that appeared to go well.

A ‘serious blow’

“This is a shift that could deal a serious blow to Japan’s economy,” said Mr Takeshi Minami, chief economist at Norinchukin Research Institute.

“The tariffs could shave Japan’s economic growth by around 0.5 percentage point or more. That’s not small for an economy with a low potential growth rate.”

The government earlier said it plans to set up about 1,000 consultation centres for concerned companies, and bring in loan support.

At the heart of the trade tensions is Mr Trump’s persistent discontent over the gaping trade deficit the US has with other nations, including Japan.

Japan’s trade surplus with the US in 2024 stood at 8.6 trillion yen (S$78 billion), the fifth-largest on record and way above average levels during Trump’s first term.

Meanwhile, Mr Ishiba has pledged to protect jobs in the auto sector after Mr Trump announced the auto tariffs, which the ruling Liberal Democratic Party’s policy chief said may create “a big economic crisis for Japan”.

The levy, which will hit fully assembled vehicles first, is set to also expand to automobile parts.

In 2024, cars and car parts accounted for a little over one-third of Japan’s exports to the US, its biggest export destination.

Auto-related companies, including material providers, employ 5.58 million people in the country, or 8.3 per cent of the total workforce, according to the Japan Automobile Manufacturers Association.

The impact will also go beyond Japan’s direct car exports to the US.

Japanese carmakers ship about 1.45 million vehicles to the US from their factories in Canada and Mexico – just shy of the 1.49 million cars exported directly from Japan to the US, according to the Trade Ministry.

Japanese automakers manufacture 3.3 million cars within the US itself. BLOOMBERG