NEW YORK Trump's tough stance on Japan's auto industry, hearkening back to the trade friction between the two countries in the 1980s, has been intensified by close ties that developed quickly between the new U.S. administration and Ford Motor.
Trump met the chief executives of Ford, Dow Chemical and other major U.S. corporations at the White House on Jan. 23. Emerging from the breakfast meeting, Ford CEO Mark Fields told reporters that the session was "very positive."
The meeting, arranged by the administration, was part of Trump's strategy to force companies to rethink plants in Mexico and other countries as he threatened anew to impose a "very major border tax" on manufacturers that move production out of the U.S.
The meeting could not have been comfortable for Fields, because Ford has benefited handsomely from the North American Free Trade Agreement. Nevertheless, it was helpful to the U.S. carmaker because Trump pledged corporate tax cuts and deregulation to promote investment in the U.S. and singled out Japan's auto imports and exports as being unfair. Recent U.S. presidents have not made such direct references to the Japanese automobile industry.
OLD ARGUMENT Japan has long been accused of shutting American vehicles out of its market. While Japan imposes no tariffs on U.S.-made cars, the U.S. levies a 2.5% import tax on Japanese cars. But Ford has often been an outspoken critic of Japan, citing nontariff barriers. The U.S. carmaker was adamantly opposed to the Trans-Pacific Partnership free trade agreement, arguing that only Japan would benefit from tariff reductions.
After former President Barack Obama's administration backed the trade agreement, Ford pulled out of the Japanese market in 2016, citing unclear local regulations.
Trump's remarks on Jan. 23 align with Ford's stance. Bill Ford, executive chairman of the automaker, met Trump at Trump Tower in New York during the election campaign. The great-grandson of company founder Henry Ford has since become close to the president, and the two have had a number of telephone conversations.
In the auto industry, Bill Ford is known for his antipathy toward Japan. When an alliance formed in 2011 by Toyota Motor and Ford Motor on hybrid technology was broken off in 2013, a Toyota official pointed to the difficulty of communicating with the Ford family as one of the reasons for the split.
Ford Motor reportedly won Trump's nod on favorable terms for investment and other operations in return for relinquishing its plan to invest in Mexico for production in 2018. It is certainly possible that the deal includes a dose of Japan-bashing. At an auto industry conference in Detroit, U.S., on Jan. 10, Bill Ford said he had discussed the tax system, foreign exchange rates and trade in his conversations with Trump.
Now that discussions about taxes and trade have begun in the U.S., the new administration may also start berating Japan over the yen's exchange rate.
Indeed, Trump on Jan. 26 pledged to make "strong controls over monetary manipulation and devaluation" part of trade talks -- a highly unusual move that could sink deals with countries, such as Japan, that consider intervention part of their toolkits. On Jan. 31, the president claimed that Japan was devaluing its currency to the detriment of U.S. companies and consumers.
Trump's "America first" policy is being unfurled, and it may spell dark days ahead for Japan.