Japanese automakers are having a strong rally on July 23 after Prime Minister Shigeru Ishiba revealed that his country reached a tariff deal with the U.S. following weeks of talks.
The U.S. has had 25% tariffs on auto tariffs since April, but President Donald Trump has negotiated that tax down to 15% for Japanese automakers like Toyota, Honda, and Nissan.
Japan relies heavily on its auto exports, which accounted for 28% of all Japanese shipments to the U.S. last year. But after a 26.7% decline in auto exports in May followed by a 26.7% decline in June, Japan was ready to make a deal.
Related: GM CEO shares sliver of hope as tariffs send it stock down
On his social media platform Truth Social, Trump claimed that Japan “agreed to buy billions of dollars worth of military and other equipment, and give us 90% of 550 billion dollars — and more!”
Last year, Japanese auto manufacturers produced 3.28 million vehicles in the U.S.
Toyota sold over 2.3 million vehicles in the U.S. in 2024, a 3.7% year-over-year increase. Between April 2024 and March 2025, the company built 1.96 million units in the U.S.
That trade imbalance was at the heart of the negotiations for Trump’s side.
“They won’t take our cars, and yet we take millions and millions of their cars into the United States. It’s not fair, and I explained that to Japan, and they understand it,” Trump said in an interview earlier this month.
The Japan Automobile Manufacturers Association (JAMA) says its members spent $4.6 billion on research and development last year.
Toyota (TM) shares jumped more than 13% on the news July 23, while Honda shares gained 12.7%.
New tariff deal helps Japanese automakers, hurts U.S. automakers
While General Motors still has the highest U.S. market share at 17% and Ford ranks third with a 13% market share, foreign models from Asia round out the top five, according to Cox Automotive data.
Toyota ranks second with 15% U.S. market share, while Korean brand Hyundai ranks fourth with 11%. Toyota’s fellow Japanese brand, Honda, is fifth in the market, with 9%.
U.S. automakers have repeatedly praised President Trump’s trade war, even as the duties eat into their bottom line.
Take General Motors, for example.
“For decades now, it has not been a level playing field for us automakers globally, with either tariffs or non-tariff trade barriers. So I think tariffs is one tool that the administration can use to level the playing field,” GM CEO Mary Barra said earlier this year.
On July 22, GM shares tanked after the company reported its performance on that playing field.
GM reported a 35% decrease in second-quarter net income of $1.8 billion. It reported $2.9 billion a year ago, following increased spending on “tariff mitigation efforts.”
Earlier this year, the company said President Trump’s 25% auto tariffs would cost it $4 billion this year. Now the company says tariffs could cost between $4 billion and $5 billion between just the second and fourth quarters.
GM isn’t the only U.S. car company to praise a policy that will cost it billions. Crosstown rival Ford is also pro-tariff.
“Last year, we assembled over 300,000 more vehicles in the U.S. than our closest competitor. That includes 100% of all our full-size trucks,” CEO Jim Farley said during the company’s last earnings call.
“In this new environment…automakers with the largest U.S. footprint will have a big advantage, and boy, is that true for Ford,” he added. “It puts us in the pole position.”
Despite that advantage, Ford estimates tariffs will shave at least $1.5 billion off the company’s EBITDA this year.
Related: Luxury automakers have a more aggressive tariff battle plan
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