Detroit automakers are concerned President Donald Trump’s trade deal with Japan will give the U.S. ally a lower tariff rate than those imposed on Canada and Mexico, two neighboring countries with close connections to the U.S. auto industry.
The U.S. auto industry is highly integrated across North American, with vehicles crossing the border with a neighboring country multiple times before final assembly and sale in the U.S.
The American Automotive Policy Council, representing U.S. automakers, said it was still reviewing the trade pact, but it doesn’t like what it has seen.
“American Automakers still need to review the details of the U.S.-Japan agreement but 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,” said Governor Matt Blunt, president of the American Automotive Policy Council.
Blunt was similarly critical in May after Trump announced a trade deal with the United Kingdom. Under the terms of that deal, the first 100,000 vehicles imported from UK manufacturers each year will be subject to a 10% tariff. Any additional cars each year would be subject to the higher 25% rate.
Ford, GM and Stellantis could be at a disadvantage under terms of the United States-Mexico-Canada Agreement, a trade pact Trump signed during his first term.
“Under this deal, it will now be cheaper to import a UK vehicle with very little U.S. content than a USMCA compliant vehicle from Mexico or Canada that is half American parts,” Blunt said at the time. “This hurts American automakers, suppliers, and auto workers. We hope this preferential access for UK vehicles over North American ones does not set a precedent for future negotiations with Asian and European competitors.”
The American Automotive Policy Council represents Ford Motor Co., General Motors Co. and Stellantis.
The Center for Automotive Research issued a report in April showing that American automakers Ford, General Motors, and Stellantis could face increased costs of more than $42 billion because of the 25% tariff on foreign automakers and auto parts.
In March, Trump announced a 25% tariff on vehicles built outside the U.S. and a 25% tariff on imported auto parts.
