American automakers are reeling from a stunning blow delivered by President Donald Trump’s latest trade maneuver. On Tuesday night, a new deal with Japan slashed tariffs on Japanese imports, tilting the playing field toward foreign competitors. This isn’t just a policy shift—it’s a gut punch to Detroit’s Big Three.
According to the Daily Mail, President Trump unveiled this trade agreement with Japan, reducing tariffs on vehicles and auto parts to 15 percent, a sharp retreat from earlier threats of a 25 percent levy.
This announcement has ignited fury among U.S. giants like General Motors (GM), Ford, and Chrysler. They argue the deal unfairly benefits Japanese brands such as Toyota and Honda. Meanwhile, Wall Street cheered the news, with Toyota’s stock soaring 13 percent and Honda’s up 12 percent in early trading on Wednesday.
Before this agreement, Japanese automakers faced the specter of steep tariffs that could have spiked consumer prices. A 25 percent tariff loomed large, threatening job cuts at U.S.-based factories run by companies like Nissan and Mazda. Trump’s pivot to a lower 15 percent rate marks a significant policy reversal.
The White House had long pitched tariffs as a lifeline for domestic manufacturing. Yet, recent data paints a grim picture—U.S. manufacturing lost 14,000 jobs in May and June, even as other sectors grew. This deal, touted by Trump as a job creator, raises questions about who truly benefits.
President Trump, speaking in the White House East Room, hailed the agreement as historic. “I just signed the largest trade deal in history,” he declared. He also predicted it would generate “hundreds of thousands of jobs.”
Detroit’s automakers are not buying the optimism. GM, Ford, and Stellantis (which includes Jeep, Dodge, Ram, and Chrysler) slammed the deal as a betrayal. Matt Blunt of the American Automotive Policy Council called it a “bad deal” for the U.S. industry.
Blunt further criticized the tariff structure, pointing out the disparity. He noted a “lower tariff” for Japanese imports compared to North American-built vehicles. This imbalance, he argues, undercuts American workers and firms.
Ford CEO Jim Farley broke down the numbers on CNN. “In a $40,000 to $50,000 F-150, 75 to 80 percent of the parts are made in America,” he explained.
Farley added that some components, like fasteners and carpet, simply aren’t available domestically. “We can’t even buy those parts [here],” he said. This reliance on imports means higher costs under current tariff rules.
The financial toll is already evident—GM reported a $1.1 billion income drop last quarter. The company expects to shell out $4 billion to $5 billion in tariffs this year. Stellantis, meanwhile, posted a $2.68 billion loss in the first half of 2025, while paying $350 million in U.S. tariffs.
Adding to the pain, destination charges—fees tied to vehicle delivery—have climbed since April, when Trump first rolled out automotive tariffs. Analyst Erin Keating of Cox Automotive confirmed the trend, noting these rising costs. For consumers, this could mean pricier cars at a time when budgets are tight.
Japanese brands like Toyota and Honda are poised to capitalize on their affordable sedan offerings. Keating highlighted that models like the Toyota Camry and Honda Civic remain “important for budget-seeking shoppers.” In contrast, U.S. automakers have largely abandoned sedans in recent years.
For investors and consumers, this deal reshapes the auto landscape. Consider watching Japanese stocks—Mazda jumped 17 percent and Nissan 8 percent post-announcement—or explore budget-friendly sedans if you’re car shopping. But for American manufacturers, this is a call to rethink strategy in a market suddenly tilted against them.