US auto makers and union upset over Trump's low 15% tariff on Japan

WASHINGTON: US automakers worry that President Donald Trump's agreement to tariff Japanese vehicles at 15% would put them at a competitive disadvantage, saying they will face steeper import taxes on steel, aluminum and parts than their competitors.

"We need to review all the details of the agreement, but this is a deal that will charge lower tariffs on Japanese autos with no US content," said Matt Blunt, president of the American Automotive Policy Council, which represents the Big 3 American automakers, General Motors, Ford and Jeep-maker Stellantis.

Blunt said in an interview the US companies and workers "definitely are at a disadvantage" because they face a 50% tariff on steel and aluminum and a 25% tariff on parts and finished vehicles, with some exceptions for products covered under the United States-Mexico-Canada Agreement that went into effect in 2020.

The domestic automaker reaction reveals the challenge of enforcing policies across the world economy, showing that for all of Trump's promises there can be genuine tradeoffs from policy choices that risk serious blowback in politically important states such as Michigan and Wisconsin, where automaking is both a source of income and of identity.

The United Auto Workers said in a statement it was "deeply angered" by the deal.

"A better deal would have held Japanese automakers to the same standards U.S. workers have fought for at GM, Ford, and Stellantis," the UAW said.

"If this becomes the blueprint for trade with Europe or South Korea, it will be a major missed opportunity," the union added.

"We need trade deals that raise standards - not reward the race to the bottom. This deal does the opposite."

Trump portrayed the trade framework as a major win after announcing it on Tuesday, saying it would add hundreds of thousands of jobs to the US economy and open the Japanese economy in ways that could close a persistent trade imbalance.

The agreement includes a 15% tariff that replaces the 25% import tax the Republican president had threatened to charge starting on Aug 1.

Japan would also put together US$550 billion (RM2.320bil) to invest in US projects at the "direction" of the president, the White House said.

The framework with Japan will remove regulations that prevent American vehicles from being sold in that country, the White House has said, adding that it would be possible for vehicles built in Detroit to be shipped directly to Japan and ready to be sold.

But Blunt said that foreign auto producers, including the US, Europe and South Korea, have just a 6% share in Japan, raising skepticism that simply having the open market that the Trump administration says will exist in that country will be sufficient.

"Tough nut to crack, and I'd be very surprised if we see any meaningful market penetration in Japan," Blunt said.