Detroit automakers object to Trump’s trade agreement with Japan

Detroit automakers object to Trump’s trade agreement with Japan

But I just signed the largest trade deal in history, I think maybe the largest deal in history with Japan. CNN business and politics correspondent Vanessa Yurkevich joins me now first on the details of the Japan trade deal. I mean, one, is it the largest trade deal in history? What are the actual elements of this deal? Yeah, well, Japan is our fifth largest trading partner. We import $148 billion worth of goods from this country. So it is an important deal with a large trading partner. Part of this deal includes a $550 billion investment by Japan into the United States. It also opens up trade, for U.S., for cars and rice that Japan would buy U.S. cars and rice. There’s a 15% tariff, though, that is up from the 10% universal tariff. But that does extend to cars and car parts. And that’s important because the U.S. is facing a 25% tariff on cars and car parts that they import. And then you can also see there that that 50% tariff on steel and aluminum does still remain, but important to point out that we are hearing from the big three U.S. car manufacturers, GM, Ford and Stellantis, through the American Automotive Policy Council, which is calling this Japan deal at first glance, a bad deal. And here’s why I want to read part of, what the president of this organization, Matt Blunt, told us. He said that any deal that charges And as I mentioned, the United States, excuse me, the American carmakers, they import a lot of cars and car parts fully assembled and manufactured in Canada and Mexico. And they are paying that 25% tariff. That is why they believe that this deal with Japan, with the United States of Japan, is unfair, because they are getting that lower rate. Jim. Interesting. Interesting that it’s not balanced, which President Trump has said repeatedly. He’s he’s been seeking. Vanessa Yurkevich thanks so much, Brianna. Let’s get some perspective now from a union leader. We’re joined by Tony Totty, who is the president of United Auto Workers Local 14, in Toledo, Ohio. He represents GM employees. Tony, great to see you again. The UAW is generally supportive of auto tariffs on foreign cars coming into the U.S. now. We’ll see Japan with a lower tariff under this agreement. How do you expect that to hurt auto jobs? It’s at first glance, I don’t like the deal. you know, Japan doesn’t import many U.S., vehicles. Last year, it was around 16,000. where we take in $40 billion of, their their imports. So, you know, even if you, say 15% to 15%, it’s still not a good deal for us. I think this is a better deal. for U.S. rice producers than it is the, U.S. auto worker. yeah, that certainly is, part of the deal. and they’ve been often excluded from importing rice to Japan. And this, has something in there for them, for sure. Do you have a message? I mean, if you were talking to the president, you were talking to his advisors on trade. What would your message to them be in terms of this deal with Japan? Well, we need the next deals to be better, especially with China, because, they’re making a lot of electric vehicles and they could flood our market and wipe us out. so they need to be much tougher on China. And, you know, we’re worried about the Mexico, Canada deal. You know, this is essentially setting the bar very low at 15%. and that could set the bar for them. we don’t like that. And we look at the health of the companies. You know, 10 to 20%, our, big three salaries come from profiteering. And when you look at Stellantis, who, reported negative numbers, they’re not going to receive that, strong profit sharing check next year. So that plays into it as well. you know, we actually need a strong trade deal, because these tariffs could go away overnight. we need to replace it with the deal, but it needs to be better than the, Japanese deal. GM says the current tariffs on cars and auto parts made, mostly mainly in Canada and Mexico, cost them $1 billion in the second quarter. And it’s expecting tariffs to cost them between 4 to 5 billion by the end of the year. Do you have any concerns about that hit to GM’s bottom line? You mentioned the profit sharing there. How could that affect auto jobs? Well, you know, fortunately for us, General Motors is doing a good job of reinvesting into the U.S. market. they just recently announced $4 billion of new investment. you know, Stellantis is bringing back the Belvidere facility that’ll be up in, 2017, up and running, I believe, and here in Toledo. We just received a $200 million investment to increase our capacity for our popular, selling trucks. so that’s all good. And we’re working with General Motors as the UAW, to, to make more investments. So that’s a good thing. And I think that’s because some of the tariffs are incentivizing, the work to come back here. We’re only 5 to 6% of the cost of the vehicle. and when you think about that and the the high tariffs that you have to pay, it just makes more sense to bring the work back. so we’re advocating for the administration, to make better deals with China, especially, and, Mexico and Canada. So GM said it has no immediate plans to hike car prices specifically to cover the costs that are associated with the tariffs. Do you expect the auto companies to just keep eating the cost of these tariffs? Well, with the cost of vehicles at an all time high, I don’t see how you could pass it on to the consumer, without, impacting the equilibrium point. And then it’ll start to decrease sales. so, you know, the quicker we get to a good trade deal where everybody understands the rules of engagement, the better off we are. but this was going to be disruptive. and they need to start bringing product back to this country. This is the largest auto market in the world. and the barriers for entry need to be much higher. to these countries. Tony. Tony, thank you so much. Really appreciate you being with us. Donald Trump unveiling a new US trade agreement with Japan just days before steep tariffs are set to kick in. The US president says Japan will now pay reciprocal tariffs on 15% and invest $550 billion in the US, creating hundreds of thousands of jobs. That trade agreement between Tokyo and Washington is already having a positive impact on Japan’s auto industry. The Nikkei closed up about 3.5%. That’s due in part to a surge in shares of Japanese automakers. Shares of Toyota surged by 14%, so what we want to know is who got the better deal, the U.S. or Japan. Joining me now is Eswar Prasad. He’s a senior fellow at the Brookings Institution. And great to have you with us. I don’t want to preempt your answer here, but I think when you consider that Japan are now worse off than the 10% levy they were paying before. It’s a complex question. Who do you think got the better deal? It certainly seems like the Trump administration got the U.S. a bit of a win here. because what has happened is that you’re going to end up in a regime where American, car manufacturers are going to be, to some extent, protected from Japanese competition. but Japan hasn’t given. and, Japan is giving the US, access to its markets, for cars rights and so on. And it doesn’t look like the Trump administration gave up very much. Japan is also, as you pointed out, agree to invest in the U.S. but for Japan, it is a partial win, because one thing that was clouding economic prospects of Japan was the prospect of 25% tariffs on its imports to the US, and certainly 15% is better than 25%. But more importantly, this takes away some of the uncertainty surrounding Japanese exports to the U.S. and certainly Japan, at a time of low growth and low domestic demand meets the US market. Yeah, but it turns out, isn’t it, that that 25% was just a threat all along? I mean, is this evidence that Trump’s aggressive approach is getting results? If one were to view these agreements that seem to be, coming into focus, and what tariffs, are being applied on US imports from the rest of the world versus us exposed to the rest of the world. It certainly sounds like, Trump and his team are winning. But the big question still remains whether it’s going to deliver, you know, as many jobs as Trump says it’s going to deliver to the US. And also about who is paying these tariffs. all the evidence so far suggests that, foreign manufacturers and not really cutting prices in order to account for the tariffs, it’s American importers and perhaps even American consumers who are going to be paying the price. So, yes, a win if you look at the outcome in terms of tariffs, but certainly not, a clear win for U.S. consumers or businesses. As a very good point. because I think the broader picture of the economy in the US is concerning. The US dollar is continuing to sink, the economy is stagnant. But look, we have, a dozen other tariff decisions still to come, deals to be set. Most notably Europe and China, of course, is the Japan deal perhaps an indication that Trump may not be willing to push his biggest trading partners as far as he claims. Certainly not as fun. And as you mentioned earlier, we started off with Trump making threats of very high levels of tariffs. Now it’s worth considering the content that America’s trading partners face. Most of them, unlike the US economy which has been powering along, have not been doing great. If you look at Europe, Japan, the United Kingdom and most of the countries, they are quite reliant on exports. Their domestic demand is not very strong. They’re not growing very strongly. So at some level they’re very keen to come to an agreement with the US, which remains a very important market. On the other side is China, of course, and China has a lot of excess capacity that it has built up. So many countries around the world need exports, and they recognize that they don’t want to open their markets to Chinese exports. And at the same time, they want to maintain access to the US market. So Trump seems to be playing it relatively well. Okay. Well, we will continue to watch this and see if that situation stays as it is as well. Eswar Prasad, we appreciate you being with us. Thank you.

The trade group representing the traditional Big Three US automakers is objecting to the US agreement with Japan, saying it would be unfair to American automakers and parts suppliers.

The trade agreement announced Tuesday by the Trump administration would place 15% tariffs on imports from Japan, including autos and auto parts. The American automakers claim that gives Japanese imports an unfair advantage over other imported vehicles, including those assembled in Mexico and Canada by US companies with a significant number of US parts. Most imported cars – including American cars made outside the United States – face a 25% base tariff rate.

CNN’s Vanessa Yurkevich reports, Brianna Keilar speaks with UAW Local 14 president Tony Totty, and Christina Macfarlane speaks with Brookings Institution senior fellow Eswar Prasad. #CNN #News