US-Japan trade deal: Impact on Automobile sector

The United States and Japan’s Strategic Trade and Investment Agreement, effective September 2025, lowered the threat of steep tariffs to a uniform 15% auto duty, easing trade tensions but maintaining pressure on Japanese automakers’ margins. While large players such as Toyota Motor Corp. and Honda Motor Co. have absorbed costs to protect volumes, export-dependent firms including Nissan Motor Co. and Mazda Motor Corp. face sharper earnings stress. The agreement is expected to accelerate localization and investment in the United States, while its effectiveness in improving the competitiveness of domestic US automakers remains uncertain.