Is Trump Constructing A Bumpy Road For Japanese Automakers?
Zacks Investment Research | May 29, 2018 08:54AM ET
Japanese carmakers have reasons to worry after the Commerce Department, under President Donald Trump’s orders last week, launched a national security investigation to check if vehicles and auto parts’ imports are threatening national security. Almost half of Japan’s car exports are to the United States and if the Commerce Department decides to impose hefty tariffs on imported cars, Japanese carmakers are likely to suffer big time.
However, Japan’s prime minister Shinzo Abe on May 28 said that he will try to convince Trump of the integral role that Japanese carmakers play in boosting the U.S. economy. Moreover, Japan has been one of United States’ close business allies. Also, Japan’s exports in April grew majorly on car exports to the United States, which indicates growing demand for Japanese cars. Given this scenario, it needs to be seen what steps the Trump administration might take against Japanese carmakers in the days to come.
Japan’s Exports Ride High on Car Demand
Japan’s exports grew 7.8% in April on a year-over-year basis. This also marks the 17th consecutive monthly growth in exports. Primarily, exports were driven by robust demand for Japanese cars in the United States. In fact, the already huge market for Japanese cars in the United States is enjoying steady growth. Japan’s April exports to the United States rose 4.3%, faster than a 0.2% year-over-year increase in March.
Robust demand for Japanese vehicles in the United States saw exports of cars rising 15.3% in April from the year-ago period. Japan is an export-oriented country and in spite of the United States imposing a 25% tariff on iron and steel, Japan’s iron and steel export to the country grew 14%.
Trump Raises Worries for Japanese Automakers
Japan exported around 1.77 million units of cars worth approximately $40 billion to the United States in 2017. As a matter of fact, the United States is one of the most lucrative markets for Japanese carmakers like Toyota Motor Corporation (NYSE:TM) , Honda Motor Co., Ltd. (NYSE:HMC) , Nissan Motor Co. (OTC:NSANY) , Mazda Motor Corporation (OTC:MZDAY) . Toyota has a Zacks Rank #3 (Hold). You can see Original post
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