In the face of tariffs, Japanese automakers choose to "pay for themselves": the export price to the U.S. sees the largest historical decline!

To cope with the impact of U.S. tariffs, Japanese automakers are adopting an aggressive strategy: sacrificing profits to maintain market competitiveness.

According to the corporate goods price report released by the Bank of Japan on Thursday, the export price index for automobiles to North America in contract currency fell by 19.4% year-on-year last month, marking the largest single-month decline since records began in 2016. This indicates that companies are choosing to absorb the tariff costs themselves rather than fully passing them on to consumers.

This "price reduction to maintain volume" strategy has raised deep concerns in the market about corporate profitability and may threaten the crucial momentum of sustained wage growth in the Japanese economy. The Bank of Japan is closely monitoring this dynamic, as the virtuous cycle of wages and inflation is a key consideration in determining the timing of the next interest rate hike.

Meanwhile, trade tensions continue to escalate. According to CCTV News, U.S. President Trump stated on the 7th that a 25% tariff will be imposed on imported products from Japan starting August 1. This will undoubtedly pose even greater challenges for Japanese automakers.

Under the Impact of Tariffs, Japan's Exports Face "Separation of Volume and Price," Central Bank Faces Policy Dilemma

The latest data clearly reveals the strategies adopted by Japanese automakers under tariff pressure. Data from the Bank of Japan shows that the 19.4% year-on-year decline in automobile prices exported to the U.S. is a direct action taken by companies to avoid fully passing on tariff costs to end prices, thereby losing competitive advantage.

Although some companies, including Subaru Corp., have announced partial price increases, the overall trend indicates that most of the tariff costs are being absorbed internally by the companies.

Other data also corroborate the strategic choices of Japanese automakers. Data shows that Japan's automobile exports to the U.S. fell by 24.7% in May, but in terms of export volume, it only decreased by 3.9%. The significant difference between export value and export volume demonstrates a notable decline in the export price per vehicle.

This strategy of Japanese automakers has raised alarms among monetary policymakers. Bank of Japan Governor Kazuo Ueda stated last week that he is closely monitoring whether the domestic "wage-inflation cycle" can be maintained in the context of U.S. tariffs, and this will serve as an important basis for judging the timing of the next interest rate hike.

Beyond the automotive industry, broader economic data also presents a complex situation. Thursday's report simultaneously showed that due to falling oil and steel prices, Japan's overall Producer Price Index (PPI) rose by 2.9% year-on-year in June, a growth rate lower than the previous month's 3.3%