U.S. automakers say that the Trump administration's recent trade agreement with Japan puts American companies and workers at a disadvantage, as they now face higher tariffs than their Japanese competitors.

The deal announced on July 22 sets tariffs on Japanese cars at 15%, down from the 25% rate President Trump had previously threatened to impose. By contrast, cars made by U.S. companies with engines and transmissions that come from Canada and Mexico are currently subject to 25% tariffs, as part of sweeping levies that impact all foreign vehicles and auto parts. In a statement to the Associated Press, the United Auto Workers union that it was "deeply angered" by the deal with Japan, with the American Automotive Policy Council (AAPC) — which represents General Motors, Ford and Stellantis — sharing similar sentiments. 

"Any deal that charges a lower tariff for Japanese imports with virtually no U.S. content than it does North American-built vehicles with high U.S. content is a bad deal for the U.S. industry and U.S. autoworkers," AAPC president Matt Blunt said.

Trump's agreement with Japan also includes incentives to open up the Japanese market to American cars. Even so, U.S.-made cars made up less than 1% of all passenger vehicle sales in Japan in 2023, and have historically been a tough sell to Japanese drivers who prefer smaller cars to the SUVs and pick-up trucks American automakers are known for. Japanese cars also travel on the left side of the road and have steering wheels placed on the right, and few such vehicles are manufactured in the U.S.

U.S. automakers have seen their profits plunge in the wake of Trump administration tariffs. On July 21, GM announced that duties in imported parts and vehicles had knocked $1.1 billion off its operating income in Q2 in 2025, while Stellantis reported that tariffs had already cost the company €300 million ($349.2 million). In May, Ford also projected that tariffs would cost the automaker $1.5 billion in 2025.