$24 billion is the U.S. tariff tab for Japanese automakers

Key Points:

• Trump administration tariffs could cost Japanese carmakers over 3.5 trillion ($24 billion), with Toyota alone accounting for $12 billion, according to UBS Securities.

• The move targets an industry that has invested heavily in U.S. jobs and factories, despite Japan imposing no tariffs on U.S. vehicle imports.

• Automakers may be forced to shift production to the U.S., though political uncertainty clouds long-term decisions.

Japanese automakers are bracing for tens of billions of dollars in potential losses following the Trump administrations decision to impose steep tariffs on imported vehicles and parts, a move that could destabilize one of the most critical cross-Pacific trade relationships.

A new analysis by UBS Securities estimates that the seven largest Japanese car brands face more than 3.5 trillion ($24 billion) in added costs. Toyota alone could bear half that total, with a projected 1.8 trillion ($12 billion) burden.

The irony, experts say, is hard to ignore: Japan does not levy any tariffs on U.S.-made vehicles, even though American automakers have long struggled to gain a foothold in the Japanese market.

Trade tensions hit key producers

Japans automobile exports to the U.S. totaled 6 trillion ($40 billion) in 2024, accounting for 30% of all vehicle exports. The U.S. is Japans single largest auto export market, according to data from the Ministry of Finance.

While many Japanese companiesincluding Toyota, Honda, Nissan, and Subarualready build millions of vehicles in U.S. factories, analysts say they may be forced to further shift production to the U.S. to absorb the financial blow.

Japanese car manufacturers will probably have to take some kind of action, such as transferring production to the United States, said Kohei Takahashi, an analyst at UBS.

But such moves are complex and slow, especially given political uncertainty around the permanence of the tariffs. Automakers remain wary of making massive investments without clarity on whether Democratsif returned to powermight roll back the policy.

Trying to absorb the shock

Toyota, which built 1.5 million vehicles in the U.S. in 2024, says it will cover the added costs of importing parts from Mexico and Canada for now. The company has major manufacturing operations in Kentucky, Alabama, Indiana, Mississippi, Texas, and West Virginia, plus a battery plant in North Carolina.

Still, several Toyota models, including the 4Runner, Prius, and Tacoma, are imported from Japan and Mexico, and their prices could spike under the new tariffs.

Lobbyists for Japanese automakers are pressuring Congress for relief, arguing that Japanese car companies are major job creators in red states.