Four decades ago, Hiroko Suzuki’s father navigated the challenges of a U.S. trade war by shifting the family auto-parts business, Kyowa Industrial, into niche products. Now, tariffs imposed by the Trump administration threaten her own attempt to diversify the 78-year-old company into medical devices.
Prime Minister Shigeru Ishiba has labeled the U.S. tariffs, including 25% on automobiles, a national crisis for Japan, the world’s fourth-largest economy.
Meanwhile, Japan’s top trade negotiator, Ryosei Akazawa, is heading to Washington for a third round of talks to address the issue.
Kyowa Industrial, a maker of prototype parts and race-car components based in Takasaki, north of Tokyo, is among six auto suppliers concerned about withstanding the tariff pressure on Japan’s car industry.
Suzuki, Kyowa’s third-generation president, expressed her worries, recalling her thoughts when the tariffs were announced: “What in the world are we going to do? This is going to be bad.”
The problems Kyowa faces illustrate Japan’s decades-long shift from dominating global chip and consumer electronics markets to relying on its auto industry, which now faces intense competition from China. This marks a contrast with the 1980s, when the U.S. imposed trade barriers on Japan’s rising exports.
Kyowa started developing neurosurgery instruments in 2016, after Suzuki realized the rise of electric vehicles would impact demand for engine components.
However, Trump’s tariffs on medical devices have complicated Kyowa’s diversification efforts. Despite not exporting auto components to the U.S., Suzuki worries that automakers will force suppliers to cut prices to offset tariffs.
Major automakers like Toyota, Nissan, and Ford have sent letters to Japanese suppliers asking for cooperation in the face of tariffs.
Nissan told suppliers to stick to previously agreed prices, while Toyota said it would work with suppliers in good faith. However, the lack of concrete support has left suppliers uncertain.
Analysts predict that the trade war will hasten consolidation in Japan’s auto industry, forcing automakers to work together to survive. The risks for Japan are clear, with the economy shrinking in the first quarter and Tokyo compiling emergency economic measures to ease the pain of tariffs.
To mitigate the impact, Kyowa is exploring alternatives, including partnering with distributors in Singapore and Hong Kong.
Also, Suzuki hopes for a resolution, citing the long history of friendship between Japan and the U.S.
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