New tariffs on cars and SUVs made in Japan have come into effect this week. Although they are cut by more than 10 per cent, yet they are 500 per cent higher than historical norms and set to drive an increase in car prices. Thus, consumers, automakers, and shareholders are bracing for higher costs this autumn.

For most of the summer, Japanese automakers absorbed the added duties rather than immediately raising sticker prices. But with pre-tariff inventory largely sold out, 2026 models are already costlier. Subaru confirmed its 2026 Outback will start at USD 34,995 – USD 5,000 more than last year’s model, after production shifts placed the vehicle under Japan’s tariff regime.
Historically, the import duty on Japanese cars stood at 2.5 per cent until the US President Donald Trump imposed an additional 25 per cent duty, bringing the rate to a steep 27.5 per cent. Later on in July, a renewed agreement brought down the import duties to 15 per cent, without any changes to the 25 per cent tariff on light trucks, known as ‘Chicken Tax’.  By contrast, Japan levies no import duty on American vehicles . Analysts note the sudden escalation is dramatic, even when compared to the “Chicken Tax”.
Why automakers face a bind
The higher tariffs do not only hit imports. Added duties on steel, aluminium and components are inflating the cost of US-made vehicles too. Automakers may spread these costs across entire line-ups to stay competitive, making higher prices a certainty, as one industry analyst observed.
Japanese consumers have historically resisted American cars due to size and design preferences. Japan’s best-seller in 2024 was the Honda N-Box, a compact city car far removed from US heavyweights like the Ford F-150. As a result, tariff battles may do little to boost US auto exports.
Also read: US auto sales climb as buyers rush to beat tariffs
Are steel & aluminium included in the deal?
Adding to the confusion, Japan’s top trade envoy, Ryosei Akazawa, clarified on 23 July,“If you are asking whether the deal includes steel and aluminium, it does not.” Despite concessions on autos, Japanese steel and aluminium exports remain under 50 per cent tariffs, among the steepest in the world.
This means the tariffs on aluminium, steel, vehicle components, and other materials will add up to the flat 15 per cent duty on automobiles while deciding on the price of the final product. 
Tokyo has long lobbied for relief, but Washington’s insistence on protecting strategic industries has blocked exemptions. That leaves Japanese automakers squeezed between higher raw material costs and higher finished-vehicle tariffs, a double blow that could reverberate through global supply chains.
To participate in our upcoming e-Magazine: End-user Revolution: ALuminium’s Impact on Modern Living to share insights into the current landscape of the automobile industry, click here. 
Responses

source