Japan says ‘every option’ on table against Donald Trump’s 25% car tariffs

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Japan’s prime minister said “every option” was under consideration and South Korea promised an emergency response after Donald Trump announced 25 per cent tariffs on car imports to the US, raising the spectre of a global trade war.

The comments from Shigeru Ishiba to Japan’s parliament came as Trump’s latest trade salvo hit shares in carmakers from Toyota to Stellantis to Ford. The Stoxx Europe 600 Automobiles & Parts index fell 3 per cent in early trading on Thursday.

Trump said the tariffs would go into effect on April 2, when Washington is also expected to apply a range of reciprocal tariffs against US partners.

The duties on cars are the most aggressive move so far in a trade policy whose chaotic rollout has been marked by U-turns and has rattled investors.

“We need to think about the best option for Japan’s national interest,” said Ishiba. “We are considering every option in order to reach the most appropriate response.”

Industry executives warned that Asian and European carmakers would be among the hardest hit. Luxury manufacturers, such as Jaguar Land Rover and Aston Martin, are also exposed given they do not make cars in the US.

As America’s trading partners raced to respond, South Korea’s industry minister Ahn Duk-geun said the country’s carmakers would experience “considerable difficulties” because of the tariffs and promised to announce emergency measures next month, following a meeting on Thursday with industry executives.

European Commission president Ursula von der Leyen said late on Wednesday that the EU was also assessing its options.

The decision by the White House to impose duties on imported car parts as well as completed vehicles would increase the damage to the car industry, analysts said. Almost half of vehicles sold in the US are imported and cars assembled in the US contain nearly 60 per cent foreign-sourced parts, according to research from Bernstein.

Sigrid de Vries, director-general of European car industry body Acea, urged Trump to “consider the negative impact of tariffs not only on global automakers but on US domestic manufacturing as well”.

European manufacturers export up to 60 per cent of the vehicles they make in the US, according to Acea. 

Japan is the largest exporter of finished vehicles to the US after Mexico, where Japanese companies are the dominant manufacturers. Japan sent $40bn worth of cars to the US in 2024, representing 28.3 per cent of its overall exports to the US.

Japan’s spokesperson Yoshimasa Hayashi described the tariffs as “extremely regrettable”. He added that the Trump administration’s trade policy could have a major impact on bilateral ties, the global economy and the multilateral trading system.

Ishiba’s February meeting with Trump in Washington had initially been hailed as a success for reasserting the strength of the US-Japan alliance.

But traders in Tokyo said the bluntness of Ishiba’s tone — along with the “every option” language — hinted at rising panic in Japan over the solidity of the relationship.

Japan has in recent weeks lobbied Washington for an exemption from tariffs, highlighting its status as the biggest supplier of foreign direct investment into the US.

The country’s economy and trade minister visited Washington this month, but the efforts have not secured the exemptions Japan had hoped for.

“Japan is the biggest investor into the United States, so we wonder if it makes sense for [the Trump administration] to apply uniform tariffs to all countries. That is a point we’ve been raising and will continue to do so,” said Ishiba.

Trump has said the steep tariffs will convince foreign companies to make more of their cars in the US, boosting the country’s manufacturing industry.

Hyundai, whose $7.6bn hybrid and electric vehicle factory in Georgia began operations on Thursday, has also unveiled plans to expand US production capacity in anticipation of the Trump tariffs.

With additional reporting by Kana Inagaki and Mari Novak in London