The growing trade deficit with Japan has become a headache for the United States. Due to this trade imbalance, US President Donald Trump is dissatisfied with Japan.
For this reason, Japan’s newly appointed Prime Minister Sanae Takaichi is looking for ways to please US President Trump.
According to a report by the international news agency Reuters, she is preparing to import Japanese cars, produced in her own country, from the United States.
This step of re-importing cars produced by Japanese automobile companies in US plants back to Japan is economically expensive and practically difficult. However, the Japanese Prime Minister has concluded to take this step to please Trump.
Following this conclusion by the government, senior officials from Japanese automobile companies Toyota and Nissan are also reportedly considering the possibility of ‘reverse imports’ from their US plants.
However, they state that goods imported from the US in this manner will be expensive due to high US labor costs and the weak Japanese Yen.
Koji Sato, the chief executive of Toyota, the world’s largest car manufacturer, said at the Japan Mobility Show held in Tokyo, “Toyota is studying the possibility of reverse imports.” “We have not taken this as a business opportunity,” he said, “but have viewed it as a means to promote the spirit of open and fair trade.”
Nissan’s chief executive, Guillaume Cartier, has also stated they are seriously studying ‘reverse imports’ from the US.
Reuters reported that the government of Japanese Prime Minister Takaichi is also planning to purchase Ford ‘F-150’ trucks from the American company. This vehicle is considered extremely unsuitable for Japan’s narrow roads. According to Reuters, in Japan, it could only be used as a snow removal vehicle.
“This is more for improving political relations with the US than for commercial reasons,” Reuters wrote, quoting auto analyst Takaki Nakanishi, “Under the current circumstances, the auto industry also seems ready to support the government in reducing trade tensions and the deficit with the US.”
The US has a trade deficit of $68.5 billion with Japan. A trade deficit of this magnitude cannot be filled by importing a few cars.
According to Nakanishi, Japan could import about 20,000 cars per year from the US. According to the Japan Automobile Manufacturers Association, Japan exported approximately 1.4 million vehicles to the US last year. Japan’s automobile industry produced 3.3 million vehicles in the US itself last year.
Japanese automobile companies have invested billions of dollars over many decades to build their factories and production networks in the American market. This trend began especially after the trade tensions of the 1980s.
The ‘reverse imports’ desired by US President Trump or Japanese Prime Minister Takaichi cannot be implemented immediately.
According to Toyota’s chief executive Sato, the cars cannot be imported directly to Japan because the safety standards between the two countries are different. They need to be modified according to Japanese standards. He mentioned that government support is needed for this.
Nissan’s Cartier also said that cars designed for the American market are built according to the needs of customers there, which are different from the needs and preferences of Japanese consumers.
Another practical challenge is that the steering wheel is on the right in Japan, whereas it is on the left in the US.
Auto market analyst Nakanishi says that while this step may not significantly improve the trade deficit, it does send a good symbolic message.
‘Its symbolic importance is quite significant. It builds an atmosphere of trust with the Trump administration,’ he said, ‘Therefore, my understanding is that this is a step to strengthen relations and maintain mutual trust, rather than for commercial benefit.’
