1 week Ago
TOKYO: Japan’s Prime Minister Shigeru Ishiba is forming a team to forge a tariff deal with United States President Donald Trump after the two spoke by phone on Monday (Apr 7) , following one of the worst days for Tokyo stocks in recent memory. But behind the scenes, Ishiba has been saying that he doesn’t know who he needs to speak with in order to talk sense to his US counterpart. It’s not hard to see why, given recent remarks from the American side.
Just take one example of Trump’s comments on a favoured topic: Auto sales. “Toyota sells 1 million foreign-made automobiles into the United States, and General Motors sells almost none” in Japan in return, Trump said last week, laying out his tariff regime. “Ford sells very little.
None of our companies are allowed to go into other countries,” he added, blasting “non-monetary restrictions” that Tokyo and others supposedly impose. After speaking to Ishiba, Trump reiterated the point in a post on Truth Social, saying: “They don’t take our cars, but we take MILLIONS of theirs!” His deputy chief of staff, Stephen Miller, was even more pointed in a post on X. “Why are American streets filled with cars from Europe and Japan but their streets are empty of American cars?” he asked.
In a follow-up, he said countries like Japan “have shut their markets to our cars while our market has been flooded with theirs.” A MYTH THAT REFUSES TO DIE That GM and Ford sell very little in Japan is true – GM shifted around 1,000 units in the fiscal year ended last month, with Ford at fewer than 200. Yet the belief that unfair trade practices are at fault isn’t only false, but also one of those enduring myths that refuses to die.
Even before Trump, Japan already levied less than the 2.5 per cent tariff on vehicle imports the US charges. How much less? Nothing, in fact – Tokyo hasn’t imposed tariffs on car imports since 1978.
The country indeed had barriers to clear in the past, but those haven’t existed for years. Other impediments have been broken down since, leaving generations of lawmakers scratching their heads over US complaints about market access. The source of their grievance is, in reality, something far simpler: The cars aren’t good enough.
American companies have simply failed to produce cars that appeal to local tastes. Japanese drivers want compact, fuel-efficient vehicles that balance excellent safety and reliability with superior value for money. Forget US manufacturers, it’s hard enough for most domestic makers to compete with these demands, which is why Toyota is responsible for one out of every two cars sold in the country.
Furthermore, fully one-third of sales are kei cars, ultra-light vehicles with small engines that are taxed at a lower rate. It’s a category no US maker even builds. The most popular American autos, meanwhile, are simply too big for Japanese roads and parking spaces.
Some versions of the Ford F-150, long the top-selling vehicle in the US, are so ludicrously large they can’t even be driven in the country with a standard driver’s license. AMERICAN CARS HAVE AN INFERIOR REPUTATION It’s also common to see foreign cars in Japan – they just need to offer something that local manufacturers can’t. That’s why foreign brands dominate the luxury market: Mercedes-Benz sold more than 50,000 vehicles last year, while BMW and Volkswagen are also successful.
While European cars have cultivated a high-end image, American cars come with an inferior reputation. That judgment could be overcome if US automakers were willing to put the work in, but they rarely are. Tesla may be one exception, with its vehicles an increasingly common sight in wealthy neighbourhoods, but the company doesn’t provide sales data.
Ironically, it seems from complaints like Miller’s that the Trump administration, usually known for its opposition to diversity, equity and inclusion and other alleged “woke” initiatives, seems not to want equality of access – but rather equity in the form of equal outcomes. JAPANESE CONSUMERS HAVE NO OBJECTIONS TO BUYING FOREIGN Cars might be the most enduring example of the narrative of closed access, but it’s far from the only one. Trump once sideswiped Japanese consumers’ supposed preference for domestically produced TVs in comments criticising the security alliance with Tokyo: “If we’re attacked, Japan doesn’t have to help us at all, they can watch it on a Sony television,” he said in 2019.
But the stereotype no longer applies: Now, more than half the TVs sold in Japan are Chinese made. Once mocked for their poor quality, these brands have begun to win over local consumers with their strong value for money. Sony’s domestic share has tumbled to fourth, with less than 10 per cent of a market dominated by Hisense and TCL Technology.
A similar story once existed around the mobile phone market. Executives from Vodafone, during its brief dalliance in Japan in the early 2000s, were baffled when consumers didn’t gravitate to their otherwise successful strategy rolled out in other countries. Commentators at the time frequently landed on some illogical patriotic preference for Japanese-made devices, rather than acknowledge that Vodafone hadn’t understood local tastes.
The reasoning ran out of runway a few years later when Apple displaced almost all domestic handset suppliers with its iPhone – which, 15 years later, still has 50 per cent of the market despite the weak yen making its devices extremely expensive. When you scratch the surface of what executives and politicians often call “informal barriers” or “non-monetary restrictions”, you often just find frustration that the regional market is tough, with nimbler rivals who better understand esoteric preferences. Customers are incredibly demanding, and their choices often diverge from global trends – which should be no surprise in a large, advanced economy with quite different cultural foundations to the West.
But from Walt Disney to LVMH, and McDonald’s to TikTok, Japanese shoppers have no objection to buying foreign. It’s just that these companies have put in the effort to suit their tastes, sometimes over decades. Whether Ishiba can persuade Trump of that argument – or whether logical arguments even make a difference – is another issue entirely.
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