Japan Auto Group ‘Profoundly Disappointed’ by Trump's Comments on Imported Cars

(Bloomberg) -- The Japan Automobile Manufacturers Association said it’s “profoundly disappointed” by U.S. President Donald Trump deeming imported cars and parts a national security threat, echoing a statement made days ago by Toyota Motor Corp.

Although the comments are unusually strong, the source of them is no surprise: Toyota President Akio Toyoda is also chairman of JAMA, the influential trade group.

“We are dismayed to hear a message suggesting that our long-time contributions of investment and employment in the U.S. are not welcomed,” Toyoda said in a statement Tuesday. “As chairman, I am deeply saddened by this decision.”

The unusually sharp-worded statements reflect rising concern on the part of Japan’s all-important auto sector ahead of Trump’s state visit later this week. The U.S. is seeking to leverage the threat of auto tariffs to reach a trade deal that, among other things, would help out ailing American farmers, while Japan is said to want the Trump administration to lower tariffs on auto parts and other industrial goods.

180-Day Deadline

Trump on Friday agreed with his Commerce Department’s conclusion that imports of vehicles and auto parts have threatened national security by eating into “American-owned” carmakers’ market share since the 1980s. The White House set a 180-day deadline for negotiating deals with Japan, the European Union and other major auto exporters.

Japan accounted for more than a quarter of the $208.8 billion deficit the U.S. ran with the rest of the world in the trading of passenger vehicles and auto parts last year, according to Commerce Department data. Trump last week set a goal of reducing imports of cars, arguing that reduced sales of domestic brands had undermined U.S. automakers’ ability to invest in research and development.

“Any trade restrictive measures would deliver a serious blow to the U.S. auto industry and economy, as it would not only disadvantage U.S. consumers, but also adversely affect the global competitiveness of U.S.-produced vehicles and suppress company investments in the U.S.,” Toyoda said.

Plenty of Presence?

Japan’s auto industry has 24 factories, 45 research-and-development or design centers and 39 distribution centers in 28 states, according to JAMA. Japanese carmakers have invested about $51 billion in manufacturing facilities and provide more than 93,000 direct American jobs, the group said.

U.S. automakers have meanwhile been on the retreat from overseas markets where they’ve long struggled to earn profits. Ford Motor Co. announced in 2016 that it would shutter all operations in Japan by the end of that year. General Motors Co.’s brands registered fewer than 1,600 vehicles in the country last year, according to the Japan Automobile Importers Association.

Toyota has the most at stake among Japanese automakers in the U.S., where it sells 23% of its vehicles, compared with 21% in its home market. The company has boosted investment in America to guard against Trump’s increasingly contentious trade stance, announcing in March that it was adding $3 billion to a five-year spending plan. That sum is on top of the $10 billion it committed to in early 2017 after drawing criticism from the then-president elect for planning to build Corolla cars in Mexico.

Even so, Toyota’s efforts to curry favor have done little to curb repeated threats by the White House to impose tariffs of as much as 25% on imported vehicles and auto parts.

Other auto organizations have also registered concern about the Trump administration’s saber-rattling. The Alliance of Automobile Manufacturers, a trade group representing a dozen of the largest domestic and foreign carmakers with operations in the U.S., warned Friday that higher prices from tariffs could put 700,000 American jobs at risk.

To contact the reporter on this story: Ma Jie in Tokyo at jma124@bloomberg.net

To contact the editors responsible for this story: Young-Sam Cho at ycho2@bloomberg.net, ;Craig Trudell at ctrudell1@bloomberg.net, Reed Stevenson, Chester Dawson

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