Detroit Automakers Wary Despite Stock Surge Following US-Japan Trade Deal
[DETROIT] Shares of leading U.S. automakers—General Motors, Ford, and Stellantis—climbed on Wednesday after news broke of a new U.S.-Japan trade deal that will cut tariffs on Japanese car imports, a move investors interpret as a sign of broader trade liberalization. However, industry insiders aren’t as optimistic.
Under the agreement announced by U.S. President Donald Trump on Tuesday, the import tariff on Japanese vehicles will drop from 27.5% to 15%. Following the news, GM shares rose 9%, Stellantis gained 12%, and Ford’s stock edged up by around 2%, as investors hoped the deal might pave the way for reduced trade barriers impacting the auto industry.
Despite the market enthusiasm, automakers expressed concern. Ford’s more modest gains reflect its lower exposure to import tariffs due to a higher percentage of domestic production.
The European Union and U.S. are reportedly close to finalizing a similar deal, also setting a 15% import tariff on European cars. In contrast, GM, Ford, and Stellantis currently face tariffs as high as 25% on vehicles imported from Mexico and Canada—depending on the amount of U.S.-made content.
This disparity is raising red flags. The companies fear that vehicles made in Japan or the U.K. with minimal U.S. input may soon face lower tariffs than North American-assembled vehicles. Lobbyists warn that if South Korea strikes a comparable deal, it could emerge as another low-cost production hub—“the new Mexico,” as one put it.
The American Automotive Policy Council, representing the Detroit Three, criticized the Japan deal for giving Japanese automakers a competitive edge over vehicles manufactured in North America. Even before this agreement, Detroit auto executives had raised alarms about Trump’s trade policies potentially benefiting foreign competitors who invest less in U.S. manufacturing.
“This is a windfall for our import rivals,” Ford CEO Jim Farley warned in February, when Trump floated plans for new tariffs on Mexico and Canada but not on South Korea.
The United Auto Workers union also condemned the deal, saying it leaves American workers behind. “This clearly shows that U.S. workers are once again being overlooked,” the union stated on Wednesday.
Coinciding with the trade announcement, GM disclosed that tariffs had cost the company US$1.1 billion—impacted by levies including 25% on imports from Canada and Mexico and 50% on steel and aluminum.
Former GM executive and industry analyst Warren Browne said the Japan deal disadvantages vehicles built in Mexico and Canada by U.S. automakers, allowing Japanese brands like Toyota to undercut them in price.
Japanese companies such as Toyota, Subaru, and Mazda, which heavily rely on Japan-based production for U.S. sales, stand to gain the most from the new tariff regime. Toyota, for instance, imported about 500,000 vehicles from Japan last year.
Japanese automotive stocks surged following the announcement. Autos Drive America, which represents these and other foreign carmakers in the U.S., welcomed the deal, saying it would encourage more investment in U.S. facilities.
Meanwhile, Wade Kawasaki, executive chairman of California-based aftermarket firm Wheel Group, also sees opportunity. His company hopes to tap into niche Japanese markets where consumers value American-made products—an effort that could gain traction thanks to lower trade barriers.
