President Donald Trump's inauguration ceremony took place on January 20, 2025 (early morning of the 21st Japan time) at the US Capitol in Washington, D.C. After delivering his inaugural address, Trump entered the White House and signed as many as 100 "executive orders" that will enable the swift implementation of important policies. What is the future of Japanese automakers?
The feared EV will slow down further?
Two days have passed since Mr. Trump was inaugurated as president for the second time. As expected, he signed nearly 100 executive orders on the day he took office. There are surprisingly many decisions that the president can make freely, such as withdrawing from the WHO after labelling the COVID-19 response as a "failure" (and rightly so), and withdrawing from the Paris Agreement on global climate change. This is unthinkable in Japan. For this reason, it was predicted that there would be major moves against the Japanese automobile industry, such as the imposition of tariffs on imports from Mexico and Canada. However, it seems that there will be no movement on tariffs. This is great news for Mazda, which imports a lot from Mexico, and the stock price jumped 5%. However, it became clear that "tightening measures are likely after all," and the stock price suddenly fell 10% at the start of trading on January 21st! Trump's feelings cause wild fluctuations in stock prices! In addition to Mazda, Nissan, which has a large sales ratio of products manufactured in Mexico, will no doubt be greatly affected. However, Japanese manufacturers such as Mazda and Nissan are not the only ones that manufacture cars in Mexico. GM and Ford also produce a significant number of vehicles in Mexico. Since Trump likes making deals, we can assume that he will make a threat and then enter into individual negotiations. Of course, it won't end for free. Honda and Subaru also rely on the American market. However, in the case of Honda, there are almost no exports from Japan. The only concern is the Canadian factory. Trump has said he will also impose tariffs on imports from Canada, which will have a major impact on Honda. Subaru, which exports a lot from Japan, has anticipated the tariff increase and has begun moving production facilities for Subaru cars sold in the United States to the United States. Toyota seems to be making careful preparations. It has already offered to donate to the Trump administration, showing its willingness to submit. In this way, the Trump camp considers it possible to make a deal. We may receive requests to increase investment in the United States, but as long as we continue doing business in other countries, we will have to accept certain conditions. This is not limited to the United States. What will happen next? Unfortunately, I have no idea. I asked several car makers who are familiar with the US, and they are also having trouble. One thing is for sure: protectionism will come. "Make cars in America if you want to sell them there." This is what has been said since the 1980s, so it's inevitable. That's why Japanese automakers built factories in America.
Which manufacturers will be at the mercy of this?
What concerns me is the future of electric vehicles. With the United States withdrawing from the Paris Agreement and saying it will accelerate the extraction of oil and shale gas, it looks like electric vehicles will be in a period of decline. Of course, there will be no more subsidies. When I write this, you may wonder, "What will happen to Elon Musk's Tesla?" But Trump and Elon Musk must have some kind of secret. It will be interesting to see what kind of preferential treatment will replace the subsidies. The Japanese automakers will be the ones to bear the brunt. Honda, the one most likely to be affected, changed direction as soon as Trump's inauguration was decided. They have announced their focus on hybrids and PHEVs. Toyota has already predicted this and switched to "Plan B" to promote the spread of electric vehicles. Mazda was late to the game, so this was perfect. Nissan may be in a panic and weak at change. Either way, it seems that we will see Darwinian evolution, where "the ones who can adapt survive." It's hard to predict what policies Trump will put forward in the future, but I think it will be tough for manufacturers who can't respond quickly.
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