President Trump returned from Japan on Tuesday where all eyes were on the trade negotiations. Discussion of the trade deficit, which has trended at just under $70 billion annually for each of the past five years, often leads to a discussion of the auto industry which, in 2008, accounted for roughly $54 billion (over 77%) of that deficit. U.S. automakers have largely remained silent, yet Japanese automakers have been quick to emphasize their manufacturing presence in the U.S. and their investments in recent years. Meanwhile, energy and technology sectors are also considering how trade negotiations could impact their industries. Is anyone considering how U.S. exports from these industries could offset the vehicle imports?
Japanese Automakers Emphasize US Production
“’We are dismayed to hear a message suggesting that our long-time contributions of investment and employment in the United States are not welcomed,’ said [Akio] Toyoda, chairman of the Japanese Automobile Manufacturers Association [and President of Toyota Motor].
Toyoda said that he was ‘deeply disappointed’ in Trump and that trade restrictions ‘would deliver a serious blow to the U.S. auto industry and economy.’
The group released new data that shows the companies have collectively invested about $51 billion in manufacturing in the United States over the last several decades. The group also estimates its members have created almost 94,000 manufacturing jobs at their U.S. plants and more than 1.6 million indirect jobs, like at dealerships and suppliers in the U.S.
‘These numbers speak for themselves about JAMA member companies’ long history of local contributions and commitment as U.S. corporate citizens, and we are certain that neither imported vehicles and parts nor our American operations ‘threaten to impair’ the U.S. national security,’ Toyoda said.”
U.S. Sees Japan As A Customer For Liquid Natural Gas (LNG)
“U.S. Deputy Secretary of Energy Dan Brouillette told reporters in Tokyo that the U.S. is working with Japan and others to build facilities for U.S. LNG exports and improve their energy security. Japan is the world’s biggest importer of LNG.“The world is right here in Asia,” Brouillette said. “Demand for LNG is very, very high here. There is an enormous amount of opportunities not only for U.S. businesses but also for Japanese businesses as well as other Asian businesses.”
Countries trying to move away from fossil fuel and coal are turning to LNG as a cleaner option. Brouillette said he is not concerned about the impact of the U.S. trade dispute with China on the American LNG business given the sharp increase of Chinese demand in recent years. Brouillette was in Japan to attend an international LNG conference and meet industry and government officials. The U.S. doesn’t require what are known as destination charges, which creates an economic opportunity to buy the gas at lower costs and sell it on the open market, Brouillette said.
Japan is the world’s biggest importer of LNG, consuming one-third of global production. Its LNG consumption soared after nuclear plants were closed following the 2011 Fukushima disaster.
Will We Be Buying More Cars In 2030 or More Technology and Energy Sources?
Spencer Weaver, Fourth View
Auto imports represent such a significant portion of the trade deficit with Japan that’s it’s understandable to direct attention towards it, but any trade solution should take into account shifting vehicle usage in the U.S. and a reasonable understanding of each country’s needs a decade down the road.
Although car ownership has been rising for the past decade, autonomous vehicles could easily turn ride-sharing apps like Uber and Lyft into car-sharing apps. Fewer millennials getting drivers licenses could also foreshadow a shift away from cars being the primary mode of transportation. Vehicle purchases across the board could shift from individual consumers to fleet sales, and the technology necessary for vehicle connectivity would become the increasingly valuable component of the industry.
Negotiators appear realistic that Japan is unlikely to become a sizable market for American cars, nor are U.S. drivers likely to give up their loyalty to Japanese cars. But in addition to looking to export agricultural products as an offset, isn’t the trade balance or imbalance of 2030 more likely to be shaped by the trade of technology underpinning car connectivity or the energy products fueling them?