The Impact of President Trump's Tariff Policy on Japan's Used Car Industry (2025 Latest Edition)

Former President Donald Trump has once again run as a major Republican candidate in the 2024 presidential election and has stated his intention to promote trade policies, including tariff increases. As of 2025, his new tariff policies may have a significant impact on Japan's used car export industry. This article provides a detailed analysis of these potential effects based on the latest information.

Background of U.S. Tariff Policy in 2025

The U.S. tariff policy in 2025 is being developed based on former President Donald Trump's "America First" agenda, which he promoted during his 2024 election campaign. One of the most notable aspects of this policy is the increase in tariffs on imported goods, with the automotive industry being one of the sectors most affected. Throughout his campaign, Trump argued that stricter tariff policies on imported goods were necessary to protect domestic manufacturing and sustain and expand employment in the United States. He specifically hinted at new import tariffs targeting major automobile-exporting countries, including China and Japan, setting the stage for intensified competition in the market.

In January 2025, the Trump administration announced its intention to explore new tariff measures on imported vehicles under Section 232 of the Trade Expansion Act of 1962 on the grounds of national security. This law is designed to protect industries critical to U.S. national security and has been previously applied to impose tariffs on steel and aluminum products. If implemented, Japanese automakers would not be exempt from the new tariffs, raising concerns about potential cost increases and reduced competitiveness.

The Japanese government and the automotive industry have expressed strong concerns over this development. For decades, Japanese automakers have invested heavily in the U.S. market and expanded local production. However, if tariffs on imported vehicles rise, these companies may face increased costs and a decline in price competitiveness. A higher tariff on complete vehicle exports from Japan would likely force manufacturers to reconsider their sales strategies, which could have a significant impact on the entire industry.

This policy is expected to affect not only Japan but also other major automobile-exporting nations such as the European Union and South Korea. As a result, international trade tensions are likely to escalate. The World Trade Organization (WTO) and various government negotiations may see heated discussions over U.S. tariff policies, potentially complicating trade agreements further. In response, automakers worldwide are intensifying their lobbying efforts and seeking diplomatic negotiations to mitigate the impact of these tariff increases.

Thus, the U.S. tariff policy in 2025 is poised to have a profound effect not only on Japan's automotive industry but also on the broader framework of international trade.

Impact on Japan’s Used Car Exports

The new tariff policies introduced by the Trump administration are expected to have a significant impact on Japan’s used car export industry. In particular, exports to the U.S. market will inevitably face increased costs due to higher tariffs, which could alter the overall competitiveness of the industry.

As of 2025, an additional tariff of up to 20% on used car exports to the U.S. is under consideration. For example, if a used car exported from Japan to the U.S. was previously priced at $10,000, the tariff would increase the final price to $12,000. Such price hikes could directly affect American consumers' purchasing behavior, making it more challenging for Japanese used cars to maintain their previous price competitiveness. This is especially concerning for consumers looking for budget-friendly used cars, as the tariff-induced price increase may deter potential buyers.

Furthermore, the tariff hike will impact the overall competitiveness of Japanese used cars. The U.S. domestic used car market is already well-established, with brands like Ford and GM dominating the space. If Japanese car prices rise, consumers may increasingly opt for more affordable American-made vehicles instead. Additionally, if direct exports from Japan to the U.S. become more expensive, some exporters may seek alternative routes, such as shipping through Canada or Mexico. However, such detours would introduce new logistical challenges and additional costs for Japanese exporters.

From a logistics perspective, Japanese used car exporters will face growing difficulties. To mitigate tariff costs, more businesses are expected to explore new shipping routes via Canada or Mexico, but this will inevitably lead to increased transportation expenses and more complex customs procedures. In particular, exporting via Mexico may introduce additional import tariffs and customs fees, reducing the cost advantages compared to direct exports from Japan. These rising logistics costs will put further pressure on exporters' profit margins and could lead to even higher used car prices.

The domestic Japanese used car market is also likely to be affected. If exports to the U.S. decline, the supply of used cars within Japan will increase, potentially driving down domestic market prices. This trend is particularly concerning for vehicle categories popular in the U.S., such as SUVs and pickup trucks, which do not have strong demand in Japan. A surplus of these vehicles in the domestic market could result in significant price drops. On the other hand, Japanese used car exporters will be compelled to seek new markets, likely accelerating a shift toward Southeast Asia and Africa. In these regions, Japanese vehicles are highly valued for their durability and quality, potentially creating new business opportunities to offset losses from the shrinking U.S. market.

In conclusion, the Trump administration’s tariff policies are expected to have widespread effects on Japan’s used car export industry. The combination of higher prices due to tariffs, reduced competitiveness, increased logistics costs, and the spillover effects on the domestic market will reshape the industry's overall structure in the coming years.

Impact on the North American Market

Japan’s used car exports primarily consist of right-hand drive (RHD) vehicles, which presents a challenge for selling them in mainland U.S., where left-hand drive (LHD) vehicles are the norm. Due to safety standards and regulatory restrictions, right-hand drive cars have limited availability for general sale in the U.S., meaning that most directly imported Japanese used cars cater to niche markets such as enthusiasts and collectors. However, regions such as Hawaii, Guam, and American Samoa, where right-hand drive cars are commonly used, have traditionally relied on Japanese used car imports. The Trump administration’s new tariff policy is expected to impact these North American markets as well.

One of the most affected segments will likely be vehicles imported under the so-called “25-Year Rule.” In the U.S., newer right-hand drive vehicles are banned from import due to safety and emissions regulations, but cars older than 25 years are exempt. This rule has fueled an increase in exports of classic Japanese cars, particularly high-performance sports cars like the Nissan Skyline GT-R and Toyota Supra. However, if new tariffs are imposed, the prices of these collector cars could rise significantly. For example, a classic Japanese car valued at ¥3,000,000 (approximately $20,000) in Japan may see a substantial price increase after tariffs are applied, reducing its affordability for American buyers. This could push some enthusiasts to seek alternative markets in Canada or Europe, where tariffs are less restrictive.

Additionally, regions like Hawaii, Guam, and American Samoa, which have long been key destinations for Japanese used cars, will also be affected if tariffs are introduced. These areas already face high shipping costs due to their geographical location, and any additional import duties would further drive up the final selling price. Japanese used cars have traditionally been a well-balanced option in terms of affordability and quality in these markets, but rising costs may shift consumer preferences. As a result, the local used car market in these regions could see increased demand, potentially driving up the prices of existing used vehicles and encouraging consumers to consider alternatives to Japanese imports. In places like Guam and Hawaii, local dealerships may start sourcing more vehicles from the U.S. mainland rather than relying on direct imports from Japan, leading to structural changes in the market.

Furthermore, some industry experts speculate that alternative import routes through Canada and Mexico may become more popular as a way to bypass tariffs. Canada currently has relatively lenient import regulations for Japanese right-hand drive vehicles, and many used cars from Japan already enter the North American market via Canada. If tariffs in the U.S. increase, more importers may attempt to register vehicles in Canada first before bringing them into the U.S., potentially leading to a surge in demand for Canadian importers. However, the U.S. government may respond by implementing stricter regulations to close this loophole. Similarly, Mexico could see an increase in parallel imports of Japanese vehicles, but its customs procedures and import duties could present challenges. The complexity of Mexican customs regulations means that the overall cost of importing Japanese vehicles via Mexico may turn out to be higher than anticipated.

In conclusion, the Trump administration’s tariff policies will likely have far-reaching consequences for the North American market, extending beyond just price increases. Structural changes in market dynamics, shifts in trade routes, and regulatory responses from neighboring countries like Canada and Mexico are expected. These developments could reshape the flow of Japanese used cars into the region and alter the overall competitive landscape in the coming years.

Interaction with Exchange Rates

In the 2025 foreign exchange market, the trend of a strong U.S. dollar (USD) and weak Japanese yen (JPY) has continued due to U.S. interest rate policies and economic conditions. This could provide some advantages for Japan’s used car exporters. Generally, a weaker yen makes Japanese exports cheaper when priced in U.S. dollars, enhancing their competitiveness in the American market. For example, if the exchange rate shifts from 1 USD = 110 JPY to 1 USD = 130 JPY, a Japanese used car valued at 1,000,000 JPY would see its dollar price decrease from approximately $9,100 to $7,700, making it more attractive to U.S. buyers.

However, the Trump administration’s proposed tariff policies could significantly limit this advantage. If a 20% tariff is imposed, the benefits of a weak yen could be neutralized, leading to higher final prices for Japanese used cars in the U.S. market. For instance, even if the exchange rate effect lowers the price to $7,700, applying a 20% tariff would push it back up to $9,240. This means that despite a weaker yen, the final cost to U.S. consumers remains elevated, reducing the expected boost in price competitiveness. Given that Japanese used cars already hold a certain market share in the U.S., further price increases due to tariffs could intensify competition with domestic used car sellers.

Moreover, currency market fluctuations are unpredictable, and the continuation of the yen’s depreciation is not guaranteed. If the U.S. economy deteriorates and the Federal Reserve (FRB) shifts toward interest rate cuts, the dollar could weaken and the yen could appreciate. If this happens, Japanese exports would become more expensive in dollar terms, posing an additional challenge for exporters. Since Japan’s used car export industry relies heavily on price competitiveness, a stronger yen—combined with high tariffs—could severely weaken its position in the U.S. market.

Additionally, exchange rate fluctuations affect not only Japanese exporters but also U.S. importers and consumers. If the yen remains weak, U.S. dealers might increase their imports from Japan while carefully monitoring tariff-related price changes. Conversely, if the yen strengthens, U.S. importers may reduce their Japanese vehicle purchases and shift toward domestic alternatives. This could further impact Japan’s export volumes and force Japanese used car exporters to explore new market strategies.

Ultimately, while exchange rate trends are a crucial factor for Japan’s used car export business, they cannot fully offset the impact of tariffs. A weaker yen may help sustain competitiveness to some extent, but whether it can compensate for tariff costs depends on overall market conditions. Japanese exporters must remain flexible and closely monitor currency fluctuations while adapting their strategies accordingly.

Shift to Other Markets (Africa, Asia, Middle East)

For Japan’s used car export industry, which relies heavily on the U.S. market, the Trump administration’s tariff increases could pose a significant challenge. As a result, exporters need to adapt to these market changes while actively shifting their focus to alternative markets. In particular, Africa, Asia, and the Middle East remain high-demand regions for Japanese used cars and are expected to see continued growth. However, each market comes with its own set of challenges and regulations, requiring careful strategic adjustments.

African Market

Africa has been a major destination for Japanese used cars, especially right-hand drive (RHD) vehicles, which align with many African countries' driving standards. However, in recent years, some nations have started to tighten import regulations.

• Kenya and Tanzania, for example, have introduced policies restricting the import of older vehicles that fail to meet environmental standards. Some countries have even implemented age restrictions, prohibiting the import of vehicles older than a certain number of years.
• Economic instability in many African nations also poses a challenge. Frequent currency devaluations increase import costs, which in turn affects consumer purchasing power. If exchange rate fluctuations cause used car prices to rise, it may become difficult to maintain sales volumes in certain regions.

To succeed in Africa, exporters must carefully monitor each country’s import regulations and economic conditions while finding ways to offer cost-effective solutions that align with local market needs.

Asian Market

Japan’s used car exports have historically played a crucial role in the Asian market, but tightening regulations are becoming more apparent in recent years.

• The Philippines and Myanmar have reinforced import restrictions on used vehicles, aiming to address environmental concerns and protect their domestic automotive industries. In the Philippines, only specific regions allow used car imports, while in Myanmar, the government has restricted imports based on vehicle age.
• Bangladesh continues to show strong demand for Japanese used cars, but rising import duties have caused prices to increase, limiting consumer access.

Given these market conditions, exporters looking to target Asia must stay updated on evolving import policies and adjust their strategies accordingly to remain competitive.

Middle Eastern Market

The United Arab Emirates (UAE)—particularly Dubai—continues to function as a re-export hub for Japanese used cars.

• Dubai’s strategic location provides access to the Middle East, Africa, and Central Asia, making it a key transit point for Japanese vehicles.
• However, competition in the Dubai used car market has intensified, meaning that success now depends not only on price and quality but also on efficient logistics and strong local sales networks.

Beyond Dubai, Saudi Arabia and Jordan are emerging as promising markets:

• Saudi Arabia has seen an increase in demand for used cars, especially since the government lifted the ban on female drivers, significantly expanding the potential customer base.
• Jordan continues to experience growth in its used car market, driven by demand from neighboring countries. Japanese cars are particularly valued for their durability and fuel efficiency, making them a strong choice for Middle Eastern consumers.

While the U.S. market remains uncertain due to tariff increases, Japan’s used car exporters can explore opportunities in Africa, Asia, and the Middle East. However, success in these markets requires thorough research, flexible adaptation to regulations, and investment in efficient logistics and sales networks. By diversifying export destinations, Japanese exporters can mitigate risks and seize new business opportunities despite the challenges posed by U.S. trade policies.

Conclusion

Japan’s used car industry is expected to be significantly affected by the tariff increases in the U.S. market. However, simply shifting to alternative markets is not a straightforward solution, as many of these regions also face tightening import regulations, currency fluctuations, and economic uncertainties.

Moving forward, Japan’s used car export industry must closely monitor U.S. trade policies while simultaneously diversifying its market strategies to mitigate risks. A multi-market approach will be crucial for sustainable growth, requiring quick adaptation to regulatory changes and the establishment of strong sales networks in key regions. By staying agile and responsive, Japanese exporters can navigate these challenges and secure a stable future for the industry despite shifting global trade dynamics.

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