U.S. President Donald Trump has criticized Japan for engaging in what he characterizes as "unfair" automobile trade practices. The issue is expected to be a major point of discussion in the upcoming bilateral talks scheduled for Feb. 10.
However, many of Trump's claims have not been based on facts. Japanese Prime Minister Shinzo Abe must first put his efforts into correcting Trump's misunderstandings. Then, if Trump still makes unreasonable demands of Japan, Abe must take a firm stand.
Last week, Trump said that Japan does "things to us that make it impossible to sell cars in Japan, and yet, they sell cars into us and they come in like by the hundreds of thousands on the biggest ships I've ever seen."
Trump, who has upheld the slogan, "America First," is likely implying that Japan's closed market and its aggressive exports to the U.S. are responsible for the decline of the U.S. auto industry and job losses. However, this is obviously not the case.
Things have changed drastically since the 1980s-1990s trade friction between Japan and the U.S. In 2015, the export of Japanese cars to the U.S. stood at 1.6 million cars, down to less than half of what the figure was at its peak. This was the result of Japanese manufacturers building factories in the U.S. and promoting production in the U.S. Over 3.8 million cars were made in the U.S. for Japanese manufacturers in 2015, at least 10 times the number 30 years ago. This generated related employment for 1.5 million people in the U.S.
The claim that the Japanese market is insular is also one-sided. While the U.S. charges a 2.5-percent tariff on imported cars, Japan has no such tariff.
Meanwhile, German cars, which compete under the same conditions as American cars, have boosted sales in Japan. They accounted for 9 percent of cars (with the exception of light vehicles) imported by Japan in 2016, breaking its record for the fourth consecutive year. The top car imports in Japan are mostly German.
American cars don't do well in the Japanese market because of reasons such as their low fuel efficiency, as well as their size, which does not suit Japan's narrow streets -- in other words, a lack of effort on the part of U.S. auto makers to cater to Japanese consumers.
An executive at an U.S. auto company, who has close ties to Trump, has said that currency manipulation has inhibited the auto trade, criticizing Japan for intentionally devaluing the yen in order to make exports more lucrative for Japanese companies. However, even when the yen was strong, standing at around 80 yen to the dollar, fuel efficient Japanese cars were popular in the U.S., while American cars did not fare well in Japan.
Some U.S. automakers point to Japan's auto safety standards, which differ from U.S. safety standards, as a nontariff barrier impeding fair trade conditions. However, auto safety is a matter of life or death for consumers, and the Japanese government must not make any concessions in this area in response to U.S. demands.
Prime Minister Abe is set to meet with Toyota Motor Corp. President Akio Toyoda ahead of his meeting with Trump. The prime minister and the auto executive are expected to confirm the contributions the Japanese auto manufacturer is making to the U.S. economy.
Abe has said he will "say what needs to be said" when he meets with Trump. He must firmly refuse to yield to unilateral pressure from the U.S.