Tariff Talk: This Week's Headlines

I think the war between Israel and Iran is taking priority over tariff deals being made.  However, there was a glimmer of hope that Japan and the U.S. would be able to strike a deal after the leaders met at the G7 Summit this week in Canada.  President Donald Trump and Japanese Prime Minister Shigeru Ishiba ended their meeting at the summit in Calgary without reaching a trade agreement, deepening concerns within Japan’s auto sector already reeling from steep U.S. tariffs. Ishiba said that negotiations remain stalled over multiple unresolved issues, and no timeline was offered for resuming talks.

The breakdown comes after nearly two months of bilateral discussions and lands just weeks before Japan’s upper house elections, where economic pressures could weigh on voter sentiment. Japan’s automotive industry—which represents 10 percent of the country’s GDP and supports roughly 5.6 million jobs—is among the hardest hit by the 25 percent U.S. tariff on vehicles and parts. Automakers including Toyota, Honda, Mazda, and Subaru are forecasting a combined $19 billion in losses this fiscal year as a direct result of the trade penalties. I am still holding out hope that a last minute deal can be struck before the Japanese election.

In other news:

• Mitsubishi Motors said Tuesday it is hiking prices of U.S. vehicles by 2.1 percent on average, the latest automaker to pass along cost increases to consumers as their expenses rise from the Trump administration’s tariffs.
• Subaru of America hiked prices on several models between $750 and $2,055 depending on the model and trim, in response to “current market conditions.”
• Ford Motor Co. in May raised prices on three models produced in Mexico by as much as $2,000, becoming one of the first major automakers to respond to Trump’s tariffs.
• About half of U.S. consumers in the market for a new vehicle said they planned to move up their purchase to avoid tariff-induced price hikes, according to a new survey by Cars.com.  The survey found 52 percent of in-market car shoppers said they were looking to buy a new vehicle sooner than they otherwise would have because of tariffs. Another 7 percent said they were considering moving faster but were “not rushing,” while 19 percent said they were delaying their purchase to see how tariffs impact vehicle prices.
• Aftermarket auto parts supplier Detroit Axle could be forced to close and lay off hundreds of employees as its lawsuit against the Trump administration’s tariffs works through federal court.
• The volume of auto parts and finished vehicles shipped to the U.S. via sea routes has declined as a result of President Trump’s tariffs on imported cars and parts.  Maritime import volume for vehicle parts and accessories dropped by 14.7 percent in May compared with the same month a year earlier, according to Descartes Datamyne, a trade database.  Importers shipped about 119,100 fewer metric tons of auto parts and accessories in May via sea routes.  Finished vehicle shipments saw less of a decline, falling 8.9 percent year over year in May.

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