Trade

In 2024 Japanese automakers manufactured 3.2 million cars in the US and imported another 1.4 million. A Toyota RAV4 is equivalent to a Chevy Equinox and both cost about $30,000. If Toyota is hit with a 25% tax then the RAV4 will cost $37,500 and this will force Toyota to build more cars in the US if they want to be price competitive. This imbalance is part of the $68 billion trade deficit the US has with Japan. This is typical of the US trade with all countries and it has been this way for decades. Historically Japan and most European countries run a trade surplus because of their tariff policies but that is about to change. The US with a $36 trillion dollar debt can no longer operate without reciprocal tariffs.