Toyota (TM), Honda (HMC), and Nissan (NSANY) stocks surged on Wednesday morning on confirmation that the Trump administration and Japanese government struck a trade deal.
“We just completed a massive Deal with Japan, perhaps the largest Deal ever made,” President Trump announced on Truth Social on Tuesday night. Trump added Japan would pay a “reciprocal” tariff on imports of 15%, as well as invest $550 billion into the US “at my direction,” Trump said, without further elaboration.
Per Reuters, Japan’s Prime Minister Shigeru Ishiba confirmed that auto tariffs will be lowered to 15% from the current 25% auto sector tariffs as part of the deal. By comparison, prior to Trump’s imposition of sector auto tariffs, Japanese car imports were subject to only 2.5% tariffs.
Read more: The latest news and updates on Trump’s tariffs
Despite this, clarity on a trade deal and a “reduction” in auto tariffs of essentially 10% have Japanese automaker stocks soaring, with US-listed Honda shares hitting a new 52-week high.
Spokespersons for Honda and Nissan did not immediately respond when reached for comment. A Toyota spokesperson said the company had no official comment at this time.
The deal is a big accomplishment of the Japanese government and Ishiba, as automobile exports to the US make up nearly 30% of Japan’s global auto exports, with the auto sector in general a significant part of the Japanese economy.
While news of a trade deal with Japan is boosting the auto sector at large on hopes of trade deals with other countries, Detroit’s Big Three automakers — General Motors (GM), Ford (F), and Stellantis (STLA) — aren’t pleased.
“Any deal that charges a lower tariff for Japanese imports with virtually no US content than the tariff imposed on North American-built vehicles with high US content is a bad deal for US industry and US auto workers,” Matt Blunt of the American Automotive Policy Council (AAPC), a trade group representing the Big Three, said to Automotive News.
Read more: What Trump’s tariffs mean for the economy and your wallet
Blunt and the AAPC argue that autos compliant with the United States-Mexico-Canada Agreement (USMCA) that are made in Canada and Mexico, where the Big Three have large operations, currently face 25% auto sector tariffs, with certain exclusions given for USMCA-compliant parts. In addition, auto parts made in the two countries face 25% tariffs.
In addition, Trump threatened to hike tariffs on Mexico to 30% and Canada to 35% on Aug. 1, though it is unclear if those heightened duties would affect autos.
Ford CEO Jim Farley has argued in the past that if Trump strikes a similar deal with Korea, for example, it would again reward those automakers who make only some of their vehicles in the US and North America and punish domestic automakers who build in Mexico and Canada.
Ford and Farley will give investors an updated statement on the tariff situation when the company reports second quarter earnings on July 30.
On Tuesday GM reported Q2 earnings took a $1.1 billion hit due to Trump’s tariffs, and Stellantis revealed on Monday that it lost $2.7 billion in the first half of the year due to a combination of lagging sales and tariffs.
Pras Subramanian is the lead auto reporter for Yahoo Finance. You can follow him on X and on Instagram.
Click here for the latest stock market news and in-depth analysis, including events that move stocks
Read the latest financial and business news from Yahoo Finance
