Hey Trump, Japanese Buy Foreign Cars (Just Not US Ones)

Japanese failing to buy hulking left-hand drive American gas guzzlers = protectionism according to the imbecile Trump.

Close links between Japanese business and government are the stuff of legend. This week, Shinzo travels to the United States to press the interests of Japanese automobile manufacturers in the face of President Trump's reflexive protectionism. Remember, he's already made a previous visit to Trump Tower shortly after Trump's election victory. Perhaps sensing this was not enough, Japan Inc. has sent Abe Stateside again:

Honda has expressed hopes that a visit to the US next week by Shinzo Abe, the Japanese prime minister, will help ease Donald Trump’s “misunderstandings” that have led the US president to take a critical stance towards Japanese carmakers.

“We have pursued a consistent policy of producing cars locally in America,” said Seiji Kuraishi, Honda’s executive vice-president, noting that 70 per cent of its cars produced in the US were sold there. “There seems to be a gap between the various things said on Twitter and the reality so I hope the misunderstandings will be resolved,” Mr Kuraishi added.

The comments by Japan’s third-largest carmaker highlight the increasing anxiety among Japanese businesses after Mr Trump threatened Toyota with a border tax for its plan to build a new plant in Mexico, and criticised Japan for what he described as a closed market for US cars. Akio Toyoda, the president of Japan’s largest carmaker, met with Mr Abe on Friday evening and they are believed to have discussed Japan’s visit to the US and Mr Trump’s policies.

During the November 2016 visit, Abe had some fantasy that the Trans-Pacific Partnership could be revived. Subsequently disabused by this fanciful notion, he and the Japanese have further been put on notice by Trump reviving 1980s-era rhetoric about Japan's trade unfairness. In trade parlance, these are "non-tariff barriers":

U.S. President Donald Trump on Monday said Japan was engaging in unfair practices on auto imports and exports, a topic that could come up when he meets Japanese Prime Minister Shinzo Abe as early as February...

"If, as an example, we sell a car into Japan and they do things to us that make it impossible to sell cars in Japan ... we have to all talk about that," he said. "It's not fair."

While Japan imposes no tariffs on U.S.-made cars, the U.S. levies a 2.5% import tax on Japanese vehicles. But American automakers feel that environmental regulations in Japan and other factors still limit their access to the market. Ford logged lackluster sales in the country before its exit last year.

Actually, the Japanese are buying a lot more foreign cars than they used to. Nearly a tenth of sales are now accounted for by foreign makes. However, American automakers have been unable to make products attractive in this market. That is, if the Japanese were so protectionist as Trump says, then all other foreign makes would be discriminated against, while clearly isn't the case anymore:

Foreign vehicles now hold a record share of the Japanese auto market even as U.S. President Donald Trump assails what he sees as unfair access hurdles, a sign that the struggles of some car companies have more to do with appeal than legal barriers...

Foreign automakers sold 295,114 vehicles in Japan last year, up 3.4% from 2015, according to the Japan Automobile Importers Association. Foreign imports' share of all registered vehicles rose to 9.1%.

But American cars have not shared in this growth. Ford Motor pulled out of the Japanese market in 2016. General Motors sells only around 1,300 vehicles a year here. U.S. automakers accounted for more than 30% of Japan's vehicle imports in 1995, but last year that figure was around 5%.

Moreover, Shinzo Abe understands this situation. To be blunt, Americans have made next-to-no effort to market cars that are suited for Japan.

Asked in parliament if Japan was doing anything to prevent the entry of U.S. cars, both Abe and his trade minister, Hiroshige Seko, pointed out there are no tariffs on American vehicles.

"It’s not only President Trump, but U.S. officials at all levels often bring this up," Abe said. "I tell them, if you go outside, you will realize that there are quite a lot of European cars, but no American cars and there are reasons for that. There are no dealers, they don’t exhibit at the Tokyo Motor Show and they don’t advertise on the television or in newspapers."

"Makers from some countries make an effort by switching the steering wheel to the other side," he said. "If there is a misunderstanding about this, I will of course explain it to the U.S. side."

If the Yanks expect to make a tidy business selling left-hand drive only, gas-guzzling behemoths made for the (less sophisticated) US market unsuited for Japan with its right-hand drive, dearer fuel, and space-constrained roads and parking, they are delusional.

There's no mystery here: US cars are profoundly unsuited for the needs and tastes of Japanese car buyers. European automakers that try hard to understand what Japanese motorists want have succeeded. On the other hand, no amount of heavy-handed US government intervention will persuade these motorists to buy quite frankly inferior models.

That's largely all there is to it. As the post title says, Trump should understand that the Japanese buy foreign cars, just not American ones. Next up: equally idiotic complaints about Japanese "currency manipulation'.