Currently Japanese cars built outside the US, new or used, are subject to a 2.5 percent import tax, but soon that number is going to get a lot bigger. On Wednesday President Trump announced plans to increase the tariff on imported cars and auto parts by 25 percent.
The tariffs are expected to include cars and car parts made in Japan, South Korea, Germany, China, Canada, and Mexico. The ostensible purpose is to buoy the US auto industry and encourage domestic manufacturing. Unfortunately, even private JDM imports can get caught in the crossfire.
For example, because of the decades old Chicken Tax, JDM light trucks and cargo vans are already subject to a 25 percent tariff. That means buyers of vehicles like the Daihatsu Hijet and Honda Street must pay a quarter of their cost to the government when the vehicles land on US shores. Trump said that the new 25 percent tariff would be in addition to existing tariffs, so passenger cars would be subject to a 27.5 percent tax and light trucks would be subject to a 50 percent tax.
On the one hand, the Chicken Tax did prompt Toyota, Nissan and other Japanese companies to establish US factories so their trucks would not be subject to the tariff. Therefore, in theory a US-built Toyota Camry or Honda Pilot would not be subject to the tariff. A Japanese-built Mazda Miata or Subaru BRZ will soon get a lot more expensive.
In the short term, though, even the US-built vehicles will likely see a price hike because every car includes some foreign-made parts. This includes Big Three products. Trump said that he plans to make the tariffs “100 percent” permanent. Prices may go back down once companies either build new factories in the US or revamp supply lines to use American suppliers.
However, there’s no alternative for 25-year-old cars that are no longer being made. Unless the administration makes an exception for classic cars, Skyline GT-Rs are probably going to get even more expensive than they already are. Classic car importation is a drop in the ocean compared to new cars, so it’s unlikely government officials will care about carving out an exemption.
“This is the beginning of Liberation Day in America,” Trump said from the Oval Office. The tariffs will go into effect April 2.
Hi, so I am thinking about importing a container full of Kei Trucks to Texas here soon and was wondering at the very end of your article if you think they will be taxed 25 percent as well? Even if they’re over 25 year lifespan.
The details of the new tariff aren’t known yet, but currently kei trucks are already subject to a 25 percent tariff, even if they are 25 years old. What remains to be seen is whether it will be subject to an additional 25 percent.
I would read the details of the legislation before assuming used JDM cars will get hit with a big tariff. April 2 signifies what, when the vehicle arrives at the port, when the vehicle hits customs release, the VIN and manufacturing date, etc. Also, does it really apply to used cars, and what is the valuation of the used car – who sets that? How does this work on a used car purchased for say, $20k, like a Mitsubishi Evo? An additional $5k is added, or can I purchase the car for $10k and pay $2500?
The amount you purchased the car for is listed on the import paperwork, that’s the basis for how much you’re taxed.
Sure, if you had some connections with the seller and exporter in Japan and you weren’t worried about comitting fraud, you might be able to “buy” it for $100, after a completely non-related $9900 charitable donation to the seller…
I have noticed on the CAR FROM JAPAN website that the total cost of the car has the actual price hidden in it. For example, a car having a total cost of $10,000 would have an actual value of $1,000. 25% of that is $250.00 making the car’s price go to $1,250 or, with the $9,000 added back in, $10,250.
What sickens me are the comments in the Toprank thread about this news. All the people who already have GTRs are greedily excited about the values of their cars going up and laughing at everyone else.
Probably the same dorks who were crying when Work started remaking the VS KF because it tanked the value of their originals. Car culture in the US isn’t about cars, it’s about bragging on social media
I, too, am worried about this whole tariff thing and how it’ll ultimately affect my next potential purchase. I’ve literally seen a renaissance of new cars rotate through my neighborhood in the last few weeks, but I wonder if Trump’s general directives go down to used car import like the stuff we JNCers like.
Not to get too political, but I wonder if the prices WILL go down once all the manufacturing has been shifted to U.S.-based; I don’t think so, because we’d have to recoup all the costs to establish that infrastructure. Not to mention the cost of living and wages, in general, being higher here in the States.
Ben, maybe a good QotW would be, “Tariffs are about to be in effect, what will you buy?”
I think we just had a QotW about importing a car recently, but excellent suggestion. Depending on how the tariff plays out in the coming weeks we could still use it!
As for prices, it seems companies are happy to use any reason in the news to raise prices. The supply chain, inflation, etc. Unfortunately they historically go in only one direction, up.
+1 on the companies using any reason to raise prices, and not lower them afterward.
About costs for U.S.-based cars, or any commodities, I would wager that most offshoring was done for cost-reasons, so my bet is that everything will cost more.
It might be because it takes time to restucture a parts supply, so tarif will be paid for a while, then the new structure will have to be paid for, then to pay good salaries to the people doing the work.
The good thing to come out of all this, I truly hope so, are good jobs.
Never mind importing a car, what concerns me more is that OEM parts for my Honda and Mazda are now going to get a lot more expensive. What people do not understand is that even if part production were to move back to the USA it would take many years for it to happen, maybe even ten or more if all new factories need to be built. Even with a 25% tariff, domestically made parts would be hard pressed to be price competitive.
Apart from looking after what the article and its text says, then I think that aside from the impact of Trump’s tarrifs towards Japanese cars and vice versa (VV), European – mainly non-German and non-Swedish – cars on American grounds may either face little or no pressure from Trump’s decision to introduce trade tarrifs (which would even affect Japanese cars imported and sold to USA once again) because in particular Peugeot, Citroen, Fiat – both are part of Stellantis along with former Mitsubishi Motors allies Chrysler and Jeep – and Renault are no longer available in US. (Although Renault’s presence there is substituted by Nissan / Infiniti and Mitsubishi, the rest of the Renault Group along with th eponymous Renault marque, Alpine and Dacia brand from Romania are ones that does not exist in America.)
Especially, with struggles to look forward at Japan’s automotive industry already facing no signs of futures – while South Korea’s Hyundai and Kia are thriving in deep like K-dramas, K-pop and other things representing the Republic of Korea such as kimchi, bibimbap and gimbap, therefore with Trump’s tarrifs would already come to effect next month, I believe that an imported Renault 5, Clio, Captur, 9, 19, Megane, 18, 21, Laguna, 20-30, 25, Safrane (can the Vel Satis be qualified?) and Espace – plus LCVs, Citroen C3, ZX, Xsara, C4, BX, Xantia, C5 and Evasion / Synergie, Peugeot 205, 206, 207, 208, 2008, 305, 309, 306, 307, 308, 3008, 405, 406, 407, 408, 504, 505, 806, 807 and others – plus the Eurovans series by Sevel, Fiat 500x 600, Uno, Punto, Stilo and Coupe and Alfa Romeo MiTo, 145, 146, GTV – mainly both generations, GT, Brera, 155, 156, 159, Stelvio and Tonale (as well as the Lancia sisters like the Ypsilon and Delta and the Euro Jeeps and Euro Ford cars) running on American soil – especially in the near future – would have face Trump’s tarrifs and even have each of them deny their exports to America while at the same time either favor those cars to be kept true to its presence in Europe or even trade America with somewhere in Asia (like Philippines, Thailand, Malaysia, Vietnam, Japan, Australia, New Zealand and SK) as those Euro vehicles’ export destinations. (With the only issues regarding that would be right-hand drive for Japan, AU, NZ, Malaysia and Thailand and left-hand drive for Philippines, Vietnam and ROK.)
And to conclude this TL;DR to remind you guys, I think the only solution to that kind of business / trade issues would have been expecting Toyota and Honda to form a joint alliance with Renault and Stellantis which would lead the way of having Toyota buy shares in Honda, the Renault Group and the former PSA Peugeot Citroen / Fiat Chrysler Automobiles (FCA) companies (now called Stellantis) just as in the same idea that a quadruple entente between Toyota, Honda, Renault and the former PSA / FCA would lead to reducing their reliances on the North American (mainly United States especially under Trump) market in favor of something one that each of the brands don’t find it as their markets of choices mostly due to failing in sales etc…. (For examples, Honda’s presence in Europe plus AU and NZ are limited while Renault and the ex PSA / FCA group have Southeast Asia and Oceania as their weakest points, so I guess with Nissan selling more cars overseas than Stellantis in particular would mean that sharing parts with Renault already would have Toyota reengineer and rebadge Renault-badged cars while Honda would do the same with Dacia, maybe we call that pooling of resources as RenaulToyota and HonDacia especially Renault also has a truck-making division like Toyota has with Hino and Isuzu for ex..)
We are beyond cooked. Production of parts and vehicles will not come back to the US in any significant way during his administration. By the time they do, consumers will have gotten used to the price increase and then the prices will never come down. Take whatever money you can spare and start buying up everything you can from your local dealerships to keep your cars on the road!
I know it is my second comment and I am a bit late, but I realised something, all these tarifs hampering free trade feel like Trump believes he will bring back the golden era of the fifties?
Like, post-war era, when the country was an industrial behemoth, boosted by war production first and by reparation and avantageous trade agreements, the one that comes to my mind being the UK’s “Export or perish”, I do not think there are any such things in our modern era.
The thing is, a lot industry giants and stock market companies offshored production to bring in more profits for the shareholders, reducing or closing local production by side-effect, sometimes lowering the price for the consumer. That is space, tooling and expertise that cannot be brought back in the blink of an eye, I remember reading somewhere that most bicycle frames come from China now, firstly because they are on their third generation of frame welder, by that I mean the guy doing the welding, so the expertise is developed and passed on, and secondly because except for boutique shops, nobody can cost-effectively make and weld a bike frame in the western world.
I do not know the state of rail-transportation in the US, but starting manufactures will create a heavy need for freight transport via truck, train and ship if waterways are available. That will create lots of jobs, but these infrastructures are government investments, and those are slow to approve and to build.
Infrastructure is the Achilles heal of America. The majority of goods are transported by truck, over public roads that are in woeful need of repair, at a time when the current political powers refuse to spend money to fix it. We politically abandoned rail as a transportation source over 50 years ago and it is never coming back. There are so many levels of problems that would need to be fixed to create this mythical “golden age” that it would literally take a hundred years, if the government were to spend the money. Do people really think private industry is going to foot the bill to do all the infrastructure upgrades needed?
I understand the American first idea, but this just seems like trying to kickstart the American car manufacturers by making it more difficult for imports to sell.
Problem is that American car companies are not known for reliable vehicles. Not for long time now.
Making it harder on the competition will give an edge to the American companies who obviously don’t give a crap about the customer and can’t make a decent automobile to boot. Lack of competition is not healthy for the market.
The American cars are unreliable diatribe is just that, something they were 30-40 years ago. Toyota have sludge issues, Audi/BMW/whoever have piston rings that are light and over time have blowby, not to mention timing chain issues. The Lexus I bought and sold was fine, however majority of then need full front control arm replacement, the interiors plastics were melting on the IP and upper door panels (tell me that aint a weird one), and I think a lot of foreign cars have that issue too. My American designed and built F150 had timing cam phasers replaced and the IP is warped from day one, however since then and 80k miles has otherwise been trouble free, while my VW Golf had to have water pump and thermostat replaced at 40k. What I am saying, American cars are no better or worse, maybe better with OLDER and actually BETTER technology than the new carp that everyone is putting out.