By Olivia Le Poidevin
GENEVA (Reuters) -Japan could lose $17 billion in car export potential in the U.S. following President Donald Trump’s decision to introduce 25% tariffs on the automotive sector, the International Trade Centre said on Friday.
“Japan’s automotive sector comprises 20% of the country’s total exports and the majority of exports are headed to the U.S. market. Now the flat 25% tariff on the sector that came into force yesterday means that Japan could lose 17 billion dollars in export potentials in the U.S., according to our calculations,” Julia Spies, ITC chief of trade and market intelligence, told reporters in Geneva.
U.S. President Donald Trump’s administration on Wednesday confirmed that his 25% global car and truck tariffs will take effect as scheduled on Thursday and that duties on automotive parts imports will be launched on May 3.
The tariffs cover more than $460 billion worth of imports of vehicles and auto parts imports annually, according to a Reuters analysis.
Slovakia, Japan and Honduras are some of the countries highly exposed to U.S. tariffs on automotives, the UN Trade agency said. The US market represents a large share of these countries automotive sector exports.
The ITC said Japan may seek to diversify its export destinations for vehicles.
“Markets such as China, Germany, the Philippines and Thailand together hold unrealised export potential for Japanese vehicles that matches the estimated loss in the U.S. market,” said Spies.
Nearly half the cars sold last year in the U.S. – the world’s largest importer of cars – were brought in from abroad, according to research firm GlobalData.
The new tariffs on cars may cost American consumers more than $30 billion in higher vehicle prices and reduced car sales in the first full year, consultancy firm Anderson Economic Group said in a report on Thursday.
The ITC is the joint agency of the World Trade Organization and the United Nations. Its goal is to help developing and transition countries achieve sustainable human development through exports.
(Reporting by Olivia Le Poidevin, Editing by Miranda Murray and David Evans)
