Losses in the Japanese auto industry could reach $21 billion this year

(Patria) - Japanese media are currently providing more details about the huge losses of around $21 billion that the automotive industry there is feared to suffer in this fiscal year, due to tariffs imposed by the administration of US President Donald Trump.

Trump's 25 percent tariffs on automobiles came into effect on April 3, followed by tariffs of the same height on vehicle parts on May 3.

The first empirical data on the losses that Japanese vehicle manufacturers will suffer due to tariffs are now available.

Renowned Toyota, for example, suffered damage of around $1.2 billion in the first month of the tariffs.

Japanese media report Bloomberg's estimate that its annual loss caused by the new tariffs could reach nearly $11 billion, although other agencies estimate the damage at around six to seven billion.

Media in Japan further state that their automotive industry could suffer a total annual loss of as much as around $21 billion due to Trump's tariffs.

They also warn that it is impossible to estimate future damage safely and precisely, as the situation changes from day to day.

In response to questions from domestic journalists concerned about the future of the most profitable branch of Japanese industry, Toyota's management recently stated that the company will not change the prices of its vehicles due to Trump's tariffs.

They will strive, they say, to maintain production of three million cars in Japan, in order to preserve the workforce and spare their suppliers from losses.

This mega-company, the world's largest manufacturer and seller of four-wheeled vehicles, can afford to do so because it has huge financial reserves. The question is, however, what will happen to other Japanese manufacturers.

For now, it is certain that they will all increase production at their plants in the US to at least partially compensate for the (upcoming) decrease in imports caused by the introduction of tariffs.

However, they will be hindered in this by the increased cost of steel, car parts, and production machinery that they import from Japan to the US for their factories.

The US administration, in fact, in addition to 25 percent on automobiles and vehicle parts, also foresees 25 percent tariffs on steel and aluminum, and 24 percent on all other Japanese products.

In addition to expanding production in the US, it is likely that the focus of sales will shift to Southeast and South Asia and other parts of the world.

Honda CEO Toshihiro Mibe stated that in this fiscal year alone, largely due to tariff problems, his corporation's profit will be more than halved, i.e., it will decrease by about 650 billion yen ($4.5 billion).

Nissan estimates that Trump's tariffs will cost it about 450 billion yen ($3 billion), while Subaru, which sells as much as half of all its vehicles in the US, speaks of $2.5 billion in losses.

Mazda executives announced that in April, the cost experienced by the company due to the newly introduced tariffs amounted to about ten billion yen (about $68 million).

Japanese media write that Suzuki is in the best position, as it does not sell cars in the US at all, only motorcycles, and should not record an annual loss of more than about 40 billion yen ($135 million).

Incidentally, 5.9 million Japanese cars were sold in the US last calendar year, both those produced in that country and those imported from Japan, Mexico, and Canada.

In 2023, 5.27 million four-wheeled vehicles worth about 110 billion US dollars were exported from Japan itself to other parts of the world.