Japan is ready to relax some of its own car‑safety rules for American vehicles as a bargaining chip in talks over U.S. tariffs, Nikkei Asia reported on Sunday. Tokyo faces a 24% levy on most exports to the United States, though that rate, like many of President Donald Trump’s duties, has been paused for 90 days. The temporary freeze is due to expire in early July, and economists warn that a snap‑back could jolt trade in both directions. A 10% universal tariff still applies, and finished cars—one of Japan’s biggest money earners—carry a separate 25% charge. Because the two countries follow different crash‑test systems, officials in Tokyo believe they can narrow the gap. Letting U.S. models meet American standards instead of Japan’s would be offered in exchange for lighter tariffs, unnamed sources told Nikkei . The tariff dispute has shaken markets and stirred fears of a deeper slowdown. Japan is trying to roll back what Trump calls “reciprocal” duties that he has imposed on dozens of trading partners. After one of the first round‑table sessions since the trade offensive began, Trump said Wednesday that the two sides had made “big progress.” Industry analysts say the wider fight over car tariffs could steer the future of electric vehicles in the United States. Tariffs may slow EV adoption in the US Many lower‑priced electric cars sold in America are imported. The 25% duty Trump placed on them is expected to raise sticker prices and curb demand. Higher costs and slower sales would squeeze profit margins and leave less money for research and development. “If they are having to spend more money to either pay for tariffs or move production to the U.S., that’s significant capex for most of the companies,” said Sam Abuelsamid, vice president of market research at Telemetry. “That’s funding not going to R&D, which means they’re not going to be able to innovate and not bring new technologies to market. That will make them less competitive in the global marketplace at a time they’re already getting shut out of China.” Affordability is already a hurdle Dealer data company Cox Automotive Inc. says the average transaction price of a new electric vehicle tops $55,000. Buyers also worry about driving range, public chargers, charging speed, grid stability, and a political debate over the cars’ role in cutting emissions. Trump has ordered a review of the federal tax credit of up to $7,500 that helps consumers. Analysts warn that adding a 25% tariff to imported models—one tool automakers have used to keep prices down—could lift costs by $4,000 to $20,000 per vehicle. Trump is acting under Section 232 of the 1962 Trade Expansion Act, saying the country needs a strong manufacturing base and secure supply chain. He argues that the duties will bring jobs home, raise tax revenue, and help reduce the federal debt. The same 25% rate will hit imported auto parts starting May 3. Parts that meet the rules of the United States‑Mexico‑Canada Agreement, which Trump signed in 2020, are exempt until the non‑U.S. share can be measured. There may be one bright spot for battery cars. The battery pack is the most expensive part of an electric vehicle. The Inflation Reduction Act, signed by former President Joe Biden in 2022, offers subsidies for battery plants in the United States, and billions of dollars are flowing into new factories. Officials say that, once a tracking system is in place, the auto tariffs will cover only the content made outside the country. A car assembled in Mexico but fitted with U.S.‑made batteries could avoid most of the duty. The administration has not said when that accounting will begin. For now, negotiators hope that a shift in Japan’s crash‑test rules will be enough to ease tensions and soften tariffs that have upended trade flows across the Pacific. Cryptopolitan Academy: Want to grow your money in 2025? Learn how to do it with DeFi in our upcoming webclass. Save Your Spot
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