Japan’s biggest companies are warning of a massive financial hit — nearly $28 billion — due to new US tariffs on goods like cars, steel, and electronics. These tariffs, which are essentially extra taxes on imported products, are part of the US government’s “reciprocal” trade strategy.
The tariffs are affecting major industries, especially automakers and metal producers. In 2023, Japan exported 1.5 million vehicles to the US, worth over $40 billion. With a 25% tariff now placed on many of these products, the cost to do business has suddenly surged.
Toyota, one of Japan’s largest carmakers, reported that in just two months — April and May — the tariffs have cost it around $1.2 billion. Honda estimated the impact would reach ¥650 billion ($4.5 billion) and has responded by slashing its long-term investment plans from ¥10 trillion to ¥7 trillion (roughly $20 billion). These decisions signal how deeply the tariffs are cutting into profits.
Nippon Steel, which is also trying to acquire US Steel for $15 billion, said the tariffs were expected to have a “tremendous impact” on both domestic and global steel markets. It did not provide specific figures but emphasized the serious risks involved.
Japan Economy Struggles Under Export Pressure and US Tariff Threat
Too Much Uncertainty for Clear Answers
The estimate of ¥4 trillion ($27.6 billion) in potential losses came from adding up tariff impact figures shared by Japan’s top 100 companies during recent earnings reports. But the actual number could be higher. Many companies either did not provide estimates or said the situation was too uncertain to make reliable predictions.
In many cases, company executives explained that they did not know how long the tariffs would last or what form future trade rules might take. As a result, providing precise financial forecasts is difficult. Some businesses are adding “buffers” — extra room in their financial planning — just in case things get worse.
For example, Sumitomo Corporation included a ¥40 billion buffer in its earnings forecast, marking the first time it had ever done so. President Shingo Ueno said this move reflects how unstable and unclear the current environment is.
Other companies, such as Hoya, which makes optical products like glasses and contact lenses, also chose not to provide figures. Chief Financial Officer Ryo Hirooka said it was pointless to report numbers without knowing what assumptions to base them on.
Japan’s $1 Trillion Trump Card? Treasury Holdings Thrust Into U.S. Trade Spat
Economic Strain Deepens
Even before the effects of the new tariffs started showing in trade data, Japan’s economy was already showing signs of weakness. Official numbers for the first quarter of 2025 showed that the country’s GDP shrank by 0.7% on an annualized basis compared to the previous quarter. This contraction points to growing fragility in Japan’s economy.
This downturn has increased pressure on government negotiators to strike a deal with the US. However, progress has been slow. A third round of trade talks is expected between Ryosei Akazawa, Japan’s chief negotiator, and US Treasury Secretary Scott Bessent, but no concrete agreements have been announced yet.
Meanwhile, some companies are exploring ways to reduce the damage. Komatsu, a major machinery maker, said it plans to change where it sources its products and improve efficiency. President Takuya Imayoshi noted that the company wants to make long-term adjustments to avoid further losses.
Still, many companies agree that if the tariffs remain in place for a long time, the financial pain will only grow. For now, uncertainty remains high, and corporate Japan is bracing for continued pressure as trade tensions between the US and Japan play out.
