It’s the reverse rustbelt issue. In order to retain their market share, Japanese automakers are slashing the prices of their export vehicles to the USA. However, simultaneous with the anticipated drop in profits, the Japanese economists are worrying what impact this will have on autoworker wages.
Not accidentally this is exactly the problem U.S. workers suffered through during the era of offshoring our manufacturing. Apparently, Japan is heading into the dynamic the U.S. rustbelt previously suffered. Imagine that.
The Straits Times – TOKYO – Japan’s automakers slashed the price of products exported to the United States at record pace, in a sign that companies are sacrificing profits to remain competitive as President Donald Trump’s tariffs hit cars.
In June, the export price index for vehicles shipped to North America plunged 19.4 per cent from a year earlier on a contract currency basis, the biggest drop in records going back to 2016, according to the Bank of Japan’s (BOJ) corporate goods price report on July 10.
The data adds to signs that Japanese automakers are trying to avoid a major price increase to remain competitive in the US, even after Mr Trump began to impose 25 per cent auto tariffs in early April. The flip side of the move is it raises concerns over companies’ profitability and whether they can continue to keep raising wages – a key component of the Bank of Japan’s sustainable inflation goal.
The report also showed producer prices overall rose 2.9 per cent from a year earlier in June, slowing from 3.3 per cent in the previous month as the price of oil and steel declined.
BOJ governor Kazuo Ueda said last week he is closely watching whether the wage-inflation cycle will be maintained in the face of the US levies, in order to determine the timing of the next rate hike. In addition to the auto and steel tariffs that are already in place, Mr Trump announced on July 7 that the across-the-board tariffs on Japan will be raised to 25 per cent starting Aug 1.
While Japanese automakers including Subaru have announced some price increases, Japan’s strategy of not raising prices too much has shown up in other data. Car exports to the US, which make up about a quarter of US-bound shipments, declined 24.7 per cent by value in May, but only 3.9 per cent by volume. (link)
🇺🇸 🇺🇸 🇺🇸
So, the US government receives 20% tariffs in revenue and the US consumer buys a Japanese produced vehicle at the same price.
Sounds good….
Just as the Sundance foretold.
Not the same, but close enough.
It sure puts a crimp in the fed’s “rule against Trump” (as in rule of thumb) ……… that rule states tariffs are going to raise prices, that is why interest rates can’t come down.
President Trump is beating that fed guy like a dirty rug.
Jerome Powell is neither a banker/financier nor an economist, he is an attorney.
MAGA economics is a beautiful thing to behold!
President Trump is schooling the so called experts in mainstream media with their bogus doomsday economic predictions!
Headlines like this need to be preserved for the future when these bloviating arrogant ignoramuses in the media attempt to spew this kind of economic doomsday garbage on the public in the future.
We already had history from President Trump‘s first term, yet the media still tried to predict doomsday after tariffs were imposed in his second term. Morons.
A really cheap course in economic theory for those interested in learning an alternative to the Ivy way of Econ.
My home town of Dayton, Ohio was a manufacturing powerhouse.
I watch Dayton die as the auto and associated industries died.
East Dayton where I was born now looks like much of Latin America not the good parts.
Breaks my !@#$%^ heart.
My Dad’s family is from Dayton. Back in the day, almost everybody worked for one of the big plants, GE and others. You may have heard of Bishop Oil (my Mom’s family). I miss White Castle!
My Dad served as CPO on the bridge of the Light Cruiser USS Dayton in WW11, Pacific Theatre.
My Dad was Senior Master Sergeant USAF, Field Maintenance Squadron. He was in Korea, Saudi Arabia and all over the US.
Yeah. Flint, Lansing, so many others too
My wife went to school in Dayton, BITD of NCR. Wright-Pat will keep the area going.
Same in Janesville Wisconsin. Thanks to Paul Ryan etal.
I’m from Youngstown; I know what you mean. Sadly, a lot of us Ohio folks know what you mean.
By design.
The great diaspora resulted in “Hamiltucky.” Hamilton and Fairfield were all great until they started building apartments on Rt.. 4.
I find it so hard to believe that Japan would not make a deal. Surely they could have served their people better with a deal of some kind.
So the pain is felt overseas, not here. And no inflation and more money in the treasury.
Abe would’ve.
Japan did make the deal. They are also shipping there cars to USA at a 20% discount.
“Japanese automaker… Subaru “ 🤷♂️
Yes Subaru, Nissan, Mitsubishi and others.. All of which actually have facilities of manufacturing in the US
But I was told that Trump tariffs make prices go up?
Go look at caulking gun prices compared to 6 months ago. Some things will go up. But these companies no doubt are putting pressure on their factories to lower prices on raw materials, trust me.
A caulking gun? How many American families need a caulking gun and it’s a one time purchase if you ever need one. I’ve worked in the business for years of using such things.
Try another example that fits most of us, not a select few who need it in their business.
The Titanic could have been saved if enough people didn’t have your kind of attitude.
I k know that this will be an unpleasant comment but I wish US car makes made better cars. Look up Casey Putsch, who designed a diesel car that gets over 100 mpg and is breathtakingly fast. If the US decided to design/build cars like that it would be truly innovative.
Seems to be the Big 3 problem.
Unions. And the fact that they now want to install too many tracking and electrical components in every car. My first truck barely had AM/FM and now they have big screens. Screw it. Give me simplicity again.
This. I have a 2006 model car and will drive it until the chassis snaps in half. Then I will consider welding it back together if I can. Telemetrics are an anathema to personal privacy, liberty, and freedom.
The main reason why my husband will never sell his 2002 F-150.
There are so many bells whistles and “helpful” driving tools that you really need a license for those too.. If you need this much help to drive maybe you shouldn’t be driving
I have a 1991 Dodge B350 MaxiWagon and a 1990 VW Cabriolet !!! Soon to have a 450 – 650 cc Japanese air cooled twin from the ’80s.
I read that a Peugeot (crummy car I know) with zero upgrades sells for less than 10k. Manual windows, door locks, transmission, carburetor. No AC or radio. NO COMPUTER! The rest is profit on garbage we have come to accept
Actually, US made cars are mostly quite good now, overall.
The mid-1970’s through 1980’s were a different story however. The “decay years”, as UAW-crippled automakers were hit with aggressive emissions and fuel economy mandates, they did the best they could but the cars were inferior and had a lot of problems, this was the opening for the Japanese. It also coincided with the start of the hollowing out of US industry overall, as China especially started their aggressive push to take it away aided by US profiteers intoxicated by the profits.
Ironically, the Japanese indirectly helped the rebound of US automakers, with competition and by bringing their OEM plants and parts suppliers to the US starting in the 1980’s*, the suppliers influenced the US automakers with better engineered and made parts.
As we all have seen, the US automakers went through wrenching upheavals, some say they are no longer “The Big Three” but just “The Three” now, with Chrysler especially gutted and reworked through multiple ownership changes, now foreign-owned Stellantis.
* Tariffs incentivized the first Japanese transplants built in the US in the early 1980s. Tariffs can work, but this was a special case: The basic infrastructure already existed in the US and the economic$ of major auto manufacturing supported the newcomers bringing in their own class-leading suppliers of critical parts and shipping in other parts, as well as integrating parts from US and other sources. They also poached US auto engineers and others to tie into the US infrastructure. This is not the situation with something like consumer products including smartphones, products of design, engineering and vast supply chain ecosystem in Asia and elsewhere that cannot be duplicated in the US and cannot feasibly support US assembly.
Even under ideal conditions like the automotive transplants of the 1980’s, it took more than a few years to build. This is not something that could be repeated in the 3 years left under Trump. There will be a handful of manufacturing operations moved to the US, but we will never see anything close to the peak US post-WWII industrial/scientific strength again – China is already ascendant as the global industrial powerhouse, the US being managed down, these trajectories will not change.
Says who?
Liz_1, reader comment threads are loaded with opinions.
Is your opinion better than any other?
Says who?
Says me.
what knowledge do you have of manufacturing in general and automobiles specifically?
Says “gadfly”.
What say you?
That’s where I disagree. This country is the exception because when it has the political will to do something, it can do it better and faster than anywhere on the planet. Some people accept Chinese hegemony like the 2nd coming.
The thing that will truly be hard to overcome is our pathetic and horrible education system.
Between DEI style curriculum & staffing, lack of discipline & coddling, and lack of work ethic and mass hypnosis of the students with smartphones, it’s little more than a babysitting service.
That alone will give the nod to China and the world, let alone manufacturing infrastructure. Also contributes to pressure for illegals and immigrants since we supposedly lack in homegrown workers.
Does it come without the noise and the stink?
The USA manufactures the best cars in the world in price Vs performance. Some others are equal, but none are better.
Your example is another 100mpg carburetor that never existed. Any good automotive engineer can design a 100mpg diesel, you just will not drive it.
Preston Tucker.
This is what I voted for!!!
That US grown rice is a real auto industry killer.
Other countries that have taken advantage of our stupid politicians who think the US taxpayer and consumer are made of money are finding out that doing business with the USA when a businessman is running the show is not as easy as when dealing with political idiots.
Let’s all decide to vote in people who have run a successful business and understand business. All levels of government.
A professional politician is not the solution for the American people.
Both Presidents Bush had been successful in business prior to becoming pols.
Did they build those businesses, or run them?
Here is the difference between President Trump and both President Bush’s.
President Trump inherited several million dollars from his father and turned it into billions.
The Bush’s inherited several million dollars from family members and would have gone broke except they got into government.
I believe Fred Trump gave Donald Trump one million dollars not several million dollars. Bushies are something else. They don;t really work. Trust fund Children who get big bucks per month no matter what stupid things they are into.
I understand that it was $10 million and that Fred Trump gifted this amount to each one of his children. However, PDJT treated the gift as a loan and repaid his father once he made enough money in his real estate ventures.
Where or what business?
CIA is a real business????
Politicians don’t have any idea how the private sector runs! That’s why they’re politicians! Trump broke that mold!
What Sundance did not spell out in this posting is the 20% slash in pricing is probably at the retail level which means it is a 25% to 30% discount at dealer price which is where the tariff is applied. This is being done so the 25% tariffs can be paid and it will not result in a price increase at the retail or consumer level. No inflation. This is being paid for in part by the government of Japan but they are not going to admit it.
The Japanese government will come on bended knee to President Trump within a month wanting to renegotiate the tariff deal.
Anyone wanting to bet.
Japan will have to negotiate.
Just like every country will.
And it’s brilliant out of President Trump, regardless of what the paid off naysayers say.
Existing Japanese auto plants will ramp up production in the US to beat the tariffs.
President Trump wants products made here in America. And that is what he will get.
The thing is, you can’t get an entire auto plant up and running in the blink of an eye, it’s a complex business.
But the money can be invested and progress can be made that will have to continue.
Toyota has proven they can build cars here and make a profit. I expect they will ramp up production if it’s physically possible to do so. It will take time though.
Others will follow.
The longer they TAKE, the more we MAKE!
Toyota has invested in the US for decades, and will soon open their $14 Billion battery plant in North Carolina later this year.
https://pressroom.toyota.com/facility/toyota-battery-manufacturing-north-carolina/
Why in the hell do you need a battery manufacturing plant in business model that most Americans don’t even subscribe too. This is the darn problem. Build more coal fired plants, small nuclear power stations etc……
This means nothing to the average American in something Trump is trying to stifle.
If Toyota makes a reasonable hybrid I might be interested. Let the market decide.
Exactly! A lower vehicle price means a lower import tariff. Meanwhile, at some point soon the Japanese will reach a “trade” deal where they agree to purchase more U.S. products and also pay for the U.S. Military protection umbrella stationed in Japan and Okinawa which I suspect is the real point of this tariff exercise. The same strategy would apply to South Korea!
This price slashing will precede the drop in quality customers expect from automobiles manufactured in Japan. Within one model year the cars from Japan will have the same look and feel as the disposable commodities built to a ‘price point’ that Ford and General Motors offer the American public.
You have no clue. There will be no change in Japanese quality “within one model year”.
two words for japan and every other country….Boo Hoo
Feel bad it may hurt the aging Japanese citizens retirement portfolio. Not!
When I was a boy, products made in the USA were the gold standard. Products made in Japan were junk. Products made in China didn’t exist. I look forward to President Trump’s policies rebuilding our industrial base once again.
When I was a boy, I’m 70 now, American cars turned to crap.
The term “planned obsolescence” ring a bell?
The plan was to get my Dad, and yours, to buy a new car every 5 years or so. Maybe less.
I had a ’70 Barracuda that both fenders rusted out. There was very little attention to life expectancy back them. The direction was to muscle cars looking sleek! Think Mustang and fastback styling!
‘The plan was to get my Dad, and yours, to buy a new car every 5 years or so. Maybe less.’
Forcing us to buy a new car every 5-10 years, or pay the equivalent to replace a battery pack, is a plan with the EVs.
Before it was “planned obsolescence” to keep sales going.
Now it is “planned sinking” of the West, transportation and energy infrastructure, by the climate canard.
Trump may pause the EV mandates, but unless and until the climate canard is fully debunked in the public square, the mandates will return.
I am 81, and my father was a Chevrolet dealer in a small town. He owned his own dealership starting in 1950. He retired around 1970 or so, saying that the product quality just wasn’t as good as it had been. So I saw a lot of innovation and good stuff (e.g., Camaro, Corvette), and mostly escaped the sad decline.
That “plan” you mention was driven by the consumer that wanted a new car every 2-3 years. Nothing more than that. It ended because the government mandates caused the base price of a car to rise so high it could no longer be made disposable. It’s as simple as that and it took a few years for the GM/Ford/Chrysler to adjust.
when I was a boy, Japan was known primarily for making those deck-of-cards-size transistor radios we held up to our ear at the beach
Yellow Poka Dot Bikini and My Boyfriend’s Back were big hits
Japan made the chinchiest sci-fi movies when us baby boomers were kids. Everyone remembers how fake and ridiculous the special effects were at the movies.
Godzilla & Mothra!
Ultra Man and Johnny Sokko & His Flying Robot.
For scaredy cats like me it made it easier for me to watch because it looked so implausible.
But they were still fun to watch.
As a child I saw Rodan, about a monster dinosaur-like bird. I didn’t sleep for weeks and never went to another sci-fi movie!!
I still have one of those transistor radios and it still works (Toshiba) I just tested it, and it works. It’s been in my desk drawer for years. It is an AM only radio.
I used to walk around with mine in my shirt pocket.
I still have my little transistor radio. A Motorola made in Taiwan. AM was king. I should get a 9V battery and see if it still works.
I kept mine under my pillow and listened to WTIX out of New Orleans every night to go to sleep.
Umm, sorry, I don’t know when you were a boy but Toshiba, Hitachi, Sony, NEC and Sanyo were all worlds better than what Americans were doing in the 70’s on. Especially in the electronics industry and televisions.
MAGA.
Get rid of all the crap on these cars that breaks and just make me a simple truck. I’d even take one with the old window cranks, instead of all the electric stuff that doesn’t last.
or one without tracking and a license plate not readable by a camera…..
I agree, BIG TIME!!👍🏻
The techies need a reason to justify their tech.
What would they do if the West returned to K.I.S.S. ?
They can’t do other kinds of work, they are too soft.
Maybe all those Japanese employees need to learn how to grow rice and soybeans.
or “learn to code”, dare I say?
I was just going to say that!
Wo Fang motors share price fell many yen today.
how about Lee Ho Fook noodles?
Gonna get a big dish of beef chow mein!
I guess the werewolf had a Chinese menu in his hand.
Sundance said: “Imagine that”
—————
In Aichi, 2025, a young autoworker reads:
“Japan slashes car prices 20% to keep U.S. market. Wages may fall.”
He remembers his father mocking Detroit’s collapse.
Now, overtime’s gone, coworkers fear cuts, and management says “be flexible.”
Across the ocean, an old GM worker in Ohio chuckles at the headline.
“Told you,” he says.
“Same game. New players.”
What goes around comes around!
On the one hand, it’s gratifying that President Trump has all the cards in his dealings with Japan, South Korea, China, the EU, Canada. Mexico…and on and on…on the other hand, it’s disgusting that every American President, from Harry Truman to Joe Biden, let the entire world take advantage of us for over 3 generations!
It is a huge indictment of all these chief executives that, not only did none of them lift a finger to help the American worker in all these 80 years, the last five presidents, (Trump excluded), pushed disastrous trade deals like NAFTA designed to decimate our industry and drive much of our middle class into poverty and despair! TPP would have been even worse had not Trump 45 refused to ratify it!
And that should give us all pause!
Why would the Bank Of Japan want inflation for their economy?
Where does one start to lower inflation?
When major pay increases are announced, commensurate prices raise in a geographic area in anticipation, even though no real costs have yet been accrued by businesses. For example, when military gets a new pay raise, area rentals, groceries and goods rise in towns and areas surrounding the base. If workers take a pay cut, then surrounding rents, groceries and goods should be mandated to go down, not stay artificially inflated out of greed. I notice things only go up, never down (except gas).
The same thing happens when a state raises the minimum wage, ostensibly to help minimum wage workers. But the number of housing units doesn’t increase; rents do. And the real beneficiaries from an increased minimum wage are union members, whose wage increases use the minimum wage as the base for calculating an increase.
Now it’s their turn to eat a crap sandwich.
the Rust Belt boomerang. 🪃
At this point in time, I’d rather have a special relationship with Japan than the UK.
I think we do, we definitely did when Abe was Japan’s PM.
PDJT and Abe were bookends at the G7s
Happy my Toyota retirement is a prepaid lifetime annuity.
USA needs to return to the days when large cities have manufacturing sectors while small and middle sized cities have their own local industrial manufacturing hubs.
Thank You PDJT