Europe Asia News

According to CCTV, US President Donald Trump’s threat to raise tariffs on automobiles imported from Canada is expected to seriously affect Japanese automakers, which hold a significant share of the Canadian automotive market.

Trump announced on August 24 that tariffs on imports of automobiles, auto parts and steel from Canada would be raised to 50 percent starting January 1, 2027.

Hidetoshi Tashiro, chief economist at Japan-based Infinity LLC, said the development could have serious consequences for the Japanese automotive sector. Tashiro said Japanese automakers hold a significant share of Canada’s automotive industry and aim to export to the large US market.

Tashiro said the United States-Mexico-Canada Agreement (USMCA) is one of the fundamental conditions of this business model, noting that the agreement allows vehicles manufactured in Canada and Mexico to be exported to the US duty-free or at significantly reduced tariff rates.

Tashiro said, “Now that this agreement could become invalid, it could deal an almost fatal blow to Japan’s automotive industry.”

Tashiro also said a growing number of Japanese companies have begun reassessing their supply chains and global strategies and adjusting them accordingly.

The Japanese economist said the US market is no longer as dominant as it was in the past, adding that it is economically likely for Japanese automakers to shift the focus of their global operations and strategies from North America to East Asia centered on China.