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Japan’s Prime Minister indicated that “all options” are being explored, while South Korea pledged an emergency response in light of Donald Trump’s escalation of the trade war, which includes a 25 percent tariff on car imports to the US.
Shigeru Ishiba’s statement in Japan’s parliament followed Trump’s announcement, which is set to take effect on April 2. On the same day, it is anticipated that Washington will introduce a series of reciprocal tariffs aimed at US partners and allies.
Asian automotive manufacturers are predicted to bear the brunt of these tariffs. Shares of Japanese carmakers fell by 2 to 5 percent on Thursday, while South Korea’s leading car manufacturers Hyundai and Kia saw declines of approximately 4 percent.
“We must evaluate the best course of action for Japan’s national interest,” stated Ishiba. “We are examining every possible option to formulate the most suitable response.”
This statement was made subsequent to European Commission President Ursula von der Leyen’s announcement that the EU is also reviewing its options.
Japan’s chief spokesperson, Yoshimasa Hayashi, characterized the tariffs as “extremely regrettable,” noting that the Trump administration’s evolving trade policies could significantly impact bilateral relations, the global economy, and the system of multilateral trade.
Ishiba had previously met with Trump in Washington in February, where the meeting was initially celebrated as a reaffirmation of the strength of the US-Japan alliance.
However, traders in Tokyo interpreted Ishiba’s candid tone—particularly his remarks about considering “all options”—as a sign of increasing anxiety in Japan regarding the stability of this relationship.
In recent weeks, Japan has been advocating for an exemption from tariffs, emphasizing its role as the largest foreign direct investor in the US.
This month, Japan’s economy and trade minister visited Washington, but their efforts did not yield the anticipated exemptions.
“As Japan is the largest investor in the United States, we question the rationale behind the Trump administration implementing uniform tariffs across all nations. This is a point we have raised and will continue to press,” Ishiba asserted.
Japanese automakers have established extensive production facilities in the US, yet their supply chains heavily depend on Canada and Mexico.
Japan ranks as the second-largest exporter of finished vehicles to the US after Mexico, where Japanese firms dominate manufacturing. In 2024, Japan exported $40 billion worth of cars to the US, representing 28.3 percent of its total exports to that market.
Goldman Sachs analysts have indicated that the repercussions for Japanese exports could be “significant” given that cars and parts form a substantial portion of exports to the US.
Nonetheless, they believe the overall economic fallout will be “somewhat limited,” as Japan would not lose its competitive edge against other car imports, predicting a GDP impact of just 0.1 percentage points.
Masanori Katayama, chair of the Japan Automobile Manufacturers Association, had earlier cautioned that implementing US tariffs on vehicle imports from Japan, Mexico, and Canada would necessitate “significant production adjustments.”
Conversely, Julie Boote, an analyst at Pelham Smithers, remarked that the tariff pressures could “ironically” compel Japan’s fragmented automotive sector to consolidate, as smaller groups would require assistance.
Ahn Duk-geun, South Korea’s industry minister, stated that Korean car manufacturers would face “substantial difficulties” due to the tariffs and vowed to disclose emergency measures next month after meeting with industry leaders on Thursday.
Hyundai, which recently inaugurated its $7.6 billion hybrid and electric vehicle plant in Georgia, has also disclosed plans to bolster US production capabilities in anticipation of the Trump tariffs.
This automaker announced a $21 billion investment in the US on Tuesday, including a $5.8 billion steel plant in Louisiana, with a goal of ramping up production to 1.2 million vehicles per year, up from the current capacity of 700,000.
