The U.S. Commerce Secretary Howard Lutnick has disclosed that American auto CEOs are in favor of President Donald Trump’s new trade deal with Japan.
What Happened: Lutnick, in an interview on CNBC on Thursday, stated that American auto CEOs have expressed their acceptance of the new trade agreement. The deal, announced by Trump earlier this week, could potentially levy lower tariffs on Japanese car imports compared to vehicles produced by U.S. companies in Canada and Mexico.
Despite objections from the American Automotive Policy Council, a group representing major U.S. automakers such as General Motors (NYSE:GM), Ford (NYSE:F), and Stellantis (NYSE:STLA), Lutnick dismissed their concerns. "Oh, my God, that's just so silly," said the Commerce Secretary, emphasizing that there would be no tariffs on the U.S. automakers if they build in America.
Under the new agreement, Japan will face a 15% tariff on cars exported to the U.S., while American automakers will be hit with a 25% tariff on vehicles they produce in Canada and Mexico and bring into the U.S. This has led to a surge in the shares of Japanese automakers such as Toyota (NYSE:TM), Honda (NYSE:HMC), Nissan (OTC:NSANY), and Mazda (OTC:MZDAY).
However, Lutnick maintained that the CEOs he spoke with did not oppose the deal.
SEE ALSO: Bitcoin Could Go To $300,000 Before ‘Great Depression’ Crisis, Traders Argue – Benzinga
Why It Matters: This new trade agreement comes on the heels of Trump announcing a $550 billion trade deal with Japan, which is expected to create hundreds of thousands of jobs. The deal also involves Japan opening its markets to US cars, trucks, rice, and other agricultural products, while agreeing to a reciprocal tariff of 15% on US imports.
However, not everyone is optimistic about the deal. Economist Justin Wolfers argues that the deal essentially results in a tax increase for American consumers. He further states that the narrative surrounding the deal is confusing and misleading.
Moreover, the acceptance of the deal by Japan is seen by some market commentators as a sign of a deeper economic crisis. They suggest that Japan accepted an unfavorable deal involving a $550 billion investment in the US, with the US receiving 90% of the profits.
Following the announcement of the deal, Japan’s 10-year bond yields surged to 1.59%, a level not seen since 2008, indicating potential economic instability.
READ MORE:
Image via Shutterstock
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
