Japan fears ban on luxury car exports to U.S.
Japan fears ban on luxury car exports to U.S.
TOKYO (Reuter): Japan's automakers could be forced to halt exports of luxury cars to the United States if Washington imposes tough sanctions after the breakdown of bilateral trade talks, company officials said yesterday.
Punitive tariffs might be severe enough to price Japanese exporters out of the U.S. market for luxury models and recreational vehicles (RV), the officials said.
"We could not export luxury cars and RVs to the United States if the U.S. imposed high import tariffs," said a spokesman for a Toyota Motor Corp, Japan's biggest automaker.
Japan exported about 200,000 luxury cars costing $35,000 or more to the United States last year, out of vehicle exports to the U.S. market totaling 1.64 million, according to Japanese industry figures.
The share prices of Japanese carmakers fell in Tokyo yesterday because of the sanctions threat, with Toyota sinking 40 yen or 2.3 percent to close at 1,690 yen ($20).
President Bill Clinton's top economic advisers decided to urge him to move ahead with trade sanctions after a last-ditch round of talks last week failed to resolve the dispute over expanding Japan's imports of foreign cars and auto parts.
Washington has not yet announced any sanctions, but Japanese newspapers said the United States was likely to increase tariffs to 25 percent for recreational vehicles and to 20 percent for luxury cars, from the present 2.5 percent.
Sanctions
Officials in Washington said the sanctions could go further and that proposed punishments would include 100 percent tariffs on Japanese luxury cars and other auto imports.
If sanctions were imposed "there would be a quite a big impact on the Japanese car industry," said Yoshifumi Tsuji, vice chairman of the Japan Automobile Manufacturers' Association, although he added that companies did not yet have a clear estimate of the possible damage.
Nobuaki Yanachi, a senior analyst at Kankaku Research Institute, said he believed the United States would still seek to resolve the dispute without the strong step of sanctions.
"But if they are imposed, there will be great damage to Japanese carmakers," he said.
Company officials also said prices of cars made at Japanese- owned factories inside the United States would have to be raised if import duties on parts were included in the sanctions -- hurting Japanese firms' market position further.
However, one Japanese industry source said Washington was unlikely to increase import tariffs on Japanese-made auto parts because the parts go not only to the U.S. plants of Japanese firms, but also to the "Big Three" U.S. automakers -- Ford Motor Co, General Motors Corp and Chrysler Corp.
Ford buys engines and transmissions made by Mazda Motor Corp, and Chrysler purchases Mitsubishi Motors Corp's engines. One of Toyota's two U.S. plants is a joint venture with GM, and Mazda produces cars jointly at a U.S. factory with Ford.
Despite the sanctions threat, the Japanese companies remained adamant that they could not meet a U.S. demand at the center of the trade dispute -- committing themselves to raising their purchases of U.S.-made auto parts.
The outlook for car sales in Japan is too foggy and exports are shrinking, the companies said. "It is difficult to make any commitments now," one official said.
"If Japan changes its policy and compromises, European and Asian nations are likely to make similar demands on Japan," he added. "Japan would get bogged down."