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bloomberg.com
US, Japan Working to Announce Reciprocal Tariffs Won’t Stack
US to Cut Car Levies and End Tariff Stacking, Japan Says
By Chris Gallagher, Yoshiaki Nohara, and Sakura Murakami
August 8, 2025 at 7:24 AM GMT+7
Updated on
August 9, 2025 at 3:50 PM GMT+7
Trade wars, tariff threats and logistics shocks are upending businesses and spreading volatility. Understand the new order of global commerce.
The US is working to finalize an announcement that would end the stacking of universal tariffs on Japanese goods, a senior Trump administration official said Friday.
The plans, detailed on the condition of anonymity, would resolve prolonged confusion over how US President Donald Trumpintended to impose levies on a key trading partner after striking a deal, and match public comments made by Ryosei Akazawa, Tokyo’s top trade negotiator, after a meeting on Thursday with his counterparts in Washington.
The announcement, which could take the form of a joint statement from the two countries, would clarify that Japan — like the European Union — would see its 15% reciprocal tariff rate incorporate existing most-favored nation duties.
Akazawa, who met with Commerce Secretary Howard Lutnick and Treasury Secretary Scott Bessent, said US officials expressed regret that the stacking rule had been applied to Japan despite a verbal agreement, and said Washington would refund any overpaid levies, he said.
“We’ve strongly urged our counterparts to promptly implement these measures,” Akazawa told reporters on Saturday, shortly after returning to Tokyo. He declined to comment on when a decision will be made, but made mention of the US-UK trade pact and how it took 54 days to take effect.
“Keeping such things in mind when it comes to timing, we believe every day matters,” Akazawa said.
Ryosei AkazawaPhotographer: Stefani Reynolds/Bloomberg
Japan was hit with higher-than-expected universal tariffs as part of the wave of new levies introduced by the Trump administration Thursday. While the scale of the discrepancy was likely minor, the confusion sparked renewed criticism of Prime Minister Shigeru Ishiba, who already faces calls to step down over a poor election showing.
“We have confirmed that when the US side takes measures to revise the executive order on universal tariffs, they will issue another order to reduce tariffs on cars and auto parts,” Akazawa said. “We will continue to urge the US side, through all available means and channels” to make those things happen, he said.
He added that he wasn’t sure when the orders would be issued, but he didn’t expect it to take as long as six months or a year.
Under the stacking system, the 15% tariff applied to Japan is being added to existing levies on its products. When Japan receives an exemption, Akazawa said that the 15% rate would apply to items that previously had levies of less than 15%, while items that in the past had tariffs of more than 15% will no longer face additional levies.
More importantly for the Japanese economy, carmakers are still struggling with tariffs at 27.5% — a combination of a previous 2.5% rate and a new 25% levy applied by Trump.
“With each day that passes, the losses incurred by Japanese companies are mounting,” Akazawa said, adding that some companies are seeing an hourly loss of ¥100 million ($679,000), without citing which companies they are.
“In this respect, there is no change to what we have been saying previously. We are seeking the issuance of the executive order as quickly as possible — whether by a day or even by a moment,” he said.
The lack of clarity on the timing of a promised cut to 15% is making it hard for the companies, mainstays of the economy, to plan ahead. The auto sector employs roughly 8% of the nation’s workforce and is a trend setter for wage growth, which has supported the central bank’s gradual interest rate hikes.
Toyota Motor Corp. this week lowered its annual guidance as it warned of a ¥1.4 trillion ($9.5 billion) hit to its bottom line from US tariffs. The world’s biggest carmaker now sees ¥3.2 trillion in operating income for the fiscal year ending in March 2026, down from its initial forecast of ¥3.8 trillion.
Some carmakers are already pinning their hopes on seeing the tariff cut sooner rather than later. Honda Motor Co. raised its annual profit forecast on Wednesday to reflect the 15% tariffs on Japanese goods, estimating ¥700 billion ($4.7 billion) in operating profit for the fiscal year ending March 2026, up from the prior guidance of ¥500 billion.
Japan’s benchmark Topix index climbed as much as 1.7% after Akazawa spoke, with a measure of automakers among sectors providing the biggest boost. Toyota and Honda each rose more than 3%.
The Trump administration has come under fire from the US car industry over the levies agreed with Japan, which critics say fail to address the biggest source of the US trade deficit with its Asian ally. About 80% of the trade gap was due to cars and car parts last year.
Akazawa chalked up the discrepancies over the stacked tariffs as a misstep introduced during the administrative processing of the agreement, insisting that Japan and the US were aligned on the trade deal agreed in late July. He also defended his call not to draw up the agreement in writing — a decision that has been questioned by opposition lawmakers as confusion mounted over the finer details of the deal.
Still, he did not give an indication of when the lower across-the-board and reduced auto tariffs may come into effect, instead saying it will happen “in a timely manner”. He hinted that he may continue to travel to Washington, and said he’d invited his US counterparts to Japan.
“As I understand it, the US side will handle the matter in a reasonable manner. That is why we are saying the tariffs will be implemented ‘in due course’,” he said.
— With assistance from Nicholas Takahashi, Akemi Terukina, and Jennifer A Dlouhy |
