U.S. car companies could face higher tariffs than Japan. Howard Lutnick says they're 'cool' with it
A trade deal put a 15% tariff on cars Japan exports to the U.S. But American firms must pay 25% tariffs for cars they manufacture in Canada and Mexico
Al Drago/Bloomberg via Getty Images
Despite American automakers’ concerns over a new U.S. trade deal with Japan, Commerce Secretary Howard Lutnick said they’re “cool with it.”
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President Donald Trump on Wednesday struck a trade deal with Japan that implemented a 15% tariff on cars it exports to the U.S. Meanwhile, under Trump’s April tariffs, American carmakers must pay a 25% import fee for cars they manufacture in Canada and Mexico.
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U.S. auto companies warn that it would put the domestic auto industry at a disadvantage.
“Any deal that charges a lower tariff for Japanese imports with virtually no U.S. content than the tariff imposed on North American-built vehicles with high U.S. content is a bad deal for U.S. industry and U.S. auto workers,” Matt Blunt, head of the American Automotive Policy Council, told CNBC on Tuesday.
But Lutnick is convinced that American auto companies don’t mind the discrepancy. In a Thursday interview with CNBC’s “Squawk on the Street,” he said that the CEOs he spoke to are “cool with” Trump’s trade deal.
Shares of Japanese automakers Toyota, Honda, Nissan, and Mazda jumped following Wednesday’s agreements, Reuters reported. Meanwhile, American carmakers are already seeing fallout from Trump’s tariffs.
Automaker Stellantis said Monday that it expects a loss of $2.7 billion in the first half of 2025 due to tariffs and other factors. The Netherlands-based owner of car brands including Chrysler, Jeep, Dodge, and Fiat estimated first-half net revenue of $86.7 billion, down from $99.1 billion during the same period last year. Second-quarter shipments fell to an estimated 1.4 million vehicles, down 6% year-over-year.
In its earnings presentation on Tuesday, GM told investors that tariffs cost the automaker over $1 billion in the second quarter, and that the company expects the impact to become more pronounced in the next quarter — totaling $4 to $5 billion for the full calendar year.
Ford will report second quarter earnings on July 30.
– Catherine Baab and Kevin Ryan contributed to this article.