On April 12, as I write this, things are still in flux. There is a lot of media coverage every day, with reports on the tariffs reaching almost hysterical levels. The reciprocal tariff rate for Japan announced by the U.S. is 24%, which is an unexpectedly high level given the past relationship between the two countries.
As a result, Japan’s real GDP is expected to fall by about 0.6% in the short term (2025) and 1.8% in the medium term (2029). This will have a huge impact on Japan, which has maintained a growth rate of around 3% per year. It has been reported that Japan is currently negotiating with the Trump administration, but it is doubtful whether the current Japanese government will be able to negotiate effectively with the US. We will see whether the terms will be reconsidered after the negotiations in the future.
I would just like to point out one thing: President Trump talks about Japan’s failure to buy American cars as unfair and negligent, but this is a clear mistake. It is true that American cars do not sell well in Japan. GM is the only company with a formal dealer network in Japan, and it is even hard to find GM dealer shops in Japan. Chrysler pulled out in 2018 and Ford in 2016.
The general reasons given for the poor sales of American cars in Japan are the lack of right-hand-drive models in the lineup and the large body sizes that don’t fit the conditions of Japanese roads. But the biggest reason is that “Japanese users can’t find any positive reasons to choose American cars.”
American cars still have the old image of being large, with large exhaust and low fuel efficiency, in contrast to the advanced image of Eu cars as high quality and high performance. Of course, this image is not true today, but American cars have hardly done any promotion in Japan to update this image. The reason why you rarely see American cars on the roads in Japan, even though Japan imposes a zero percent tariff on American cars, is that American car brands have not made any efforts to actively develop models that are suitable for Japanese road conditions, to promote their brand image, or to improve their dealer networks.
Tesla is the only brand that sells well and is seen frequently because Tesla has made sales efforts in the Japanese market. PSR
Akihiro Komuro is Research Analyst, Far East and Southeast Asia, for Power Systems Research
