Japan automaking association expects low tariffs and free trade after NAFTA renegotiation

Japan automaking association reported on Friday that it hopes country’s export partners to keep tariffs on vehicles and components low and maintain free trade relationships to promote and strengthen transparent trade, as NAFTA renegotiated and called for the enhancement of requirements for locally produced cars contents made in three signatory nations – Mexico, Canada, and the United States, where Japan automakers have factories.

At the same time, the news broke out that the United States, a major market for Japanese cars, did not reprieve Japan from imported aluminium and steel tariffs exemptions. The country (United States) is also mulling tougher environmental rules for imported cars to protect US automakers.

Seiichi Nagatsuka, an executive member of the Japan Automobile Manufacturers Association briefed to some reporters during a roundtable event alongside incoming association chairman Akio Toyoda, who also serves as president of Toyota Motor Corp, “The global auto industry has a complex supply chain, so we hope to see regulations that will allow for free trade.”

He further added (7203.T), “Tariffs should be low and rules should be established to maintain trade transparency.”

The United States accounts for one-third of global vehicle sales at Japan’s top three automakers – Toyota, Nissan Motor Co Ltd. (7201.T), and Honda Motor Co Ltd. (7267.T). But now, after the US restrictions on vehicles and components imports, Japan may face difficulty and rise in cost in operating business in the US.

Most of Japan’s major automakers operate plants in the United States and its top three locally manufacture the majority of cars and trucks they sell in the country.

Besides, Toyota, Nissan and Honda produce vehicles in Mexico, as well, while Toyota and Honda also operate plants in Canada. The companies may face risks if NAFTA increases tariffs on vehicles and parts made in those two countries after renegotiation.

Japan, on the other hand, is also considering pouncing back on the US with heavy duties on US exports worth US$409 million, in retaliation against US tariffs on aluminium and steel imports.