Japan vows to take decisive action as the U.S. imposes a 25% tariff on automobile imports. With autos making up 28.3% of Japan’s exports to the U.S., the move could hit its economy hard. Prime Minister Shigeru Ishiba says Tokyo is considering "all options" in response.

Japanese Prime Minister Shigeru Ishiba said on Thursday Tokyo will put "all options on the table" in dealing with Washington's announcement to impose a 25% tariff on automobile imports.

U.S. President Donald Trump on Wednesday unveiled a 25% tariff on imported cars and light trucks starting next week, widening the global trade war he kicked off upon regaining the White House this year.

"Japan is a country that is making the largest amount of investment to the United States, so we wonder if it makes sense for (Washington) to apply uniform tariffs to all countries. That is a point we've been making and will continue to do so," Ishiba told parliament.

"We need to consider what's best for Japan's national interest. We're putting all options on the table in considering the most effective response," Ishiba said, without elaborating on the possible steps Tokyo may take.

Analysts say the move could deal a heavy blow on Japan's economy given its reliance on auto exports to the United States.

Shares in Japanese auto makers fell sharply in early trade on Thursday. 

Automobiles made up 28.3% of Japan's total exports to the United States in 2024, the biggest ratio among all items, according to Ministry of Finance data.

The auto industry makes up roughly 3% of Japan's gross domestic product (GDP) and has been the driver of recent wage hikes, as automakers distribute the huge profits they reaped overseas to their employees.

Takahide Kiuchi, executive economist at Nomura Research Institute (NRI), expects an 25% increase in U.S. auto tariffs to push down Japan's GDP by around 0.2%.

"The Trump tariff has the potential to immediately push Japan's economy into deterioration," he said.

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