US-Japan Trade Negotiations Only Levy Auto Tariffs, And Trump Gourd Sells Peony?

- Oct 31, 2019-

After American cars have encountered difficulties in China and Europe, Trump must not want the status of the US automobile manufacturing industry to decline globally. In order to achieve a balance between trade and industry, he has to focus on the United States to occupy a significant share. Japanese car.


Trump is a confused person.


On October 7, 2019, representatives of the US and Japan formally signed a new trade agreement at the White House. When Trump spoke at the signing ceremony, he specially sent a "birthday greeting" to Shinzo Abe: "I want to wish my very good friend a happy birthday to Japanese Prime Minister Shinzo Abe. He is 39 years old today." But in fact, Abe The birthday is September 21, and Abe is 65 years old. Even more coincidentally, the real birthday of the day was Russian President Vladimir Putin.


Perhaps this is a small joke, but Trump is very clear when he faces key principle issues such as national interests and trade balance.


According to the new trade agreement signed between the United States and Japan on the same day, Japan will reduce tariffs on US food and agricultural products of about 7.2 billion US dollars, while the United States only cut tariffs on Japanese agricultural products of 40 million US dollars. Before Japan had repeatedly called for the reduction of automobile tariffs, and even gave the United States a more favorable tariff policy, but Trump, who was hard and unconcerned, did not make concessions to Japan on automobile tariffs.


This result may make some regrets for Mr. Toyoda, the president of the Japan Automobile Industry Association, which was re-elected on September 26. It is important to know that he publicly expressed his attitude towards the negotiation of the trade agreement between Japan and the United States at the press conference on the day of his re-election: "The trade discussion between the United States and Japan is moving in the direction of avoiding automobile tariffs, which is beneficial to both countries. Pay tribute to the tremendous efforts of Japanese and American officials."


The auto tariff has not been waived, and Toyota estimates that 10,000 alpacas are flying past. Although Toyota has set up a factory in the United States for local production, half of the components are still produced in Japan, so the dependence on exports to the United States is very high. At the same time, due to the limited domestic market capacity of Japan, Toyota has to ensure domestic employment and economic benefits. It has to export a large number of domestically produced cars to the United States, which once occupied one-third of Toyota's production and sales.


From the perspective of export details, the automobile industry, which is the mainstay of the Japanese economy, relies heavily on the United States. Among the 15 trillion yen exported to the United States, automobile-related exports amounted to 6 trillion yen, which is quite prominent compared with other export products. There is no doubt that Trump, as a family member of the American car, has any reason to waive the tariff on Japanese cars. In the US-Japan trade agreement, the non-concession of automobile tariffs can also be seen as a suppression of Japanese cars.


After all, in addition to Japanese cars exported to the United States, Japanese cars have also borrowed the "oil crisis" and successfully captured the US domestic market and achieved considerable status. This has caused the share of American car companies in their domestic markets to drop from the 90% level in the peak period to half of the market.


According to sales data of the US auto market in 2018, only four of the top 10 Japanese cars accounted for 32% of the total sales of the US auto market. In 2017, the share of Japanese cars in the US was as high as 40%. In terms of peering, Ford closed all its operations in Japan as early as 2016. According to data from the Japan Automobile Importers Association, GM registered less than 1,600 cars in Japan in 2018.


Perhaps another reason is that in today's highly globalized automotive industry, Trump does not want any decline in the global market position of American cars, even by Japan and Germany, even if he hopes Revitalizing the US manufacturing industry, forcing Ford and GM to reduce the number and amount of overseas investment, this "killing one thousand, self-destruction eight hundred" way is more for negotiation.


However, the reality is that after Trump took office, American cars suffered a lot of setbacks in the global mainstream market segments such as China and Europe. This is true for both the US economy and the global automobile market. A big blow. For example, the Ford brand of the past 100 years has encountered a certain crisis in the Chinese market. The monthly sales have dropped from the previous 100,000+ to the current 20,000. Not only did GM's sales in China show a decline above the market average, but mainstream products suffered a heavy blow, and even the profits generated were year-on-year.


In Europe, GM gave up the market that has been working for 90 years. After a loss of about 20 years, GM finally decided to close the door in continental Europe and sell the troubled Opel and Vauxhall brand. Ford Motor Company announced that it will lay off large-scale layoffs, stop production models, close some factories in Europe, and commit to revitalizing European business through strategic contraction.


In contrast, Japanese brands are flourishing in the Chinese market where the US and Japanese face each other, even in the US domestic market, the market performance is better than the US local brands, then as a strong president, see the United States Car brands have been in crisis in China and Europe. Trump is bound to need a certain trade and industrial balance from other places, and in particular, in the trade friction with China, it is too late to achieve the set goals.


Some analysts believe that the possibility of letting the United States make concessions in terms of automobile tariffs is too small, and Trump will certainly not let go of any opportunity to pass on the risk of trade deficit, which has been in recent years from Trump and the world. Trade negotiations between countries can be seen.


Reuters reported that the US trade deficit with Japan is about $67 billion, most of which stems from automotive products. Trump has repeatedly threatened to impose tariffs on imported cars to 25% on the grounds of maintaining national security.


US Trade Representative Robert Wright Heze said that the United States and Japan will resolve import tariffs in the next round of negotiations, and negotiations are expected to begin in April next year. Kyodo News reported that Japan will seek to completely waive tariffs on cars and parts, but the general reaction of the Japanese media is relatively negative, and it is unlikely that it will be approved by the US.