Japanese Prime Minister Shigeru Ishiba’s efforts to secure relief from U.S. auto tariffs made little headway this week during a meeting with President Donald Trump at the G7 summit in Canada.
Despite a brief conversation between the two leaders, Japan remains on course to face additional 24% tariffs set to take effect on July 9.
Japan had hoped to win full exemption from the 25% tariff already imposed on imported cars. Government officials had also pushed for a reduction to 10%, similar to a deal the U.S. made with Britain. However, the meeting with Trump ended without any concrete progress, casting doubt on Ishiba’s ability to manage trade relations ahead of next month’s upper house election.
Trump said on Air Force One that “there was a chance of a deal” but indicated the U.S. would enforce its position. He said companies could avoid the tariff by choosing not to do business with the U.S.
Japan’s auto industry, which accounts for a fifth of its exports and employs nearly one in 10 workers, has already reported early financial damage. Toyota said the tariffs have cost it about 180 billion yen ($1.2 billion) in April and May. Honda expects a 650 billion yen ($4.5 billion) hit to annual profits, while Mazda declined to give a forecast due to the uncertainty.
Japan’s exports fell in May for the first time in eight months, adding pressure to the economy. Officials had hoped to balance trade by increasing purchases of U.S. gas and other goods, but Washington did not shift its stance.
Ishiba now faces pressure to delay the full rollout of the broader tariffs, as political risks grow. The combined tariffs could reduce Japan’s gross domestic product by nearly 1%, according to estimates from local research institutions.
As elections approach, Ishiba’s political position is at risk. His ruling coalition is expected to face challenges retaining control of the upper house, which may lead to leadership changes within the Liberal Democratic Party if results mirror those of the last lower house vote.
Ishiba may have another opportunity to speak with Trump at the upcoming NATO summit in The Hague, scheduled for June 24.
