Japanese Carmakers' U.S. Market Share Rises to 37.4%
No Drastic Price Hikes Despite Escalating Tariff Pressures
As U.S.–Japan Tariff Talks Conclude, Can the Auto Industry Breathe Easier?

Japanese automakers have steadily expanded their market share in the United States during the first six months of Donald Trump’s second term. Their strategy of minimizing price hikes despite tariff pressures appears to be paying off, resonating well with cost-conscious American consumers.

Japanese Automakers Hold Steady in U.S. Market

On July 22, Japan’s Jiji Press reported that Japanese carmakers have continued to perform strongly in the U.S. market, despite headwinds from Trump-era tariffs. Bolstered by strong demand for hybrid vehicles (HVs), the companies have maintained solid sales without significant price increases. According to U.S. automotive research firm Cox Automotive, the combined market share of Japan’s six major automakers rose from 36.7% in 2024 to 37.4% in the first half of 2025. Toyota, the industry leader, increased its share from 14.6% to 15.3%, while Honda’s share climbed from 8.8% to 9.1% over the same period.

Behind this resilience lies a strategic restraint in pricing. Of the six major Japanese carmakers, only three raised vehicle prices in recent months—and among them, only Subaru matched the 25% tariff rate imposed by the U.S. on imported vehicles. Mitsubishi raised prices by just 2.1% across three models, while Toyota implemented only modest price hikes of several hundred dollars on select models.

Analysts say this cautious pricing reflects Japan’s heavy dependence on the U.S. auto market. In 2024, Japan’s automobile exports to the U.S. totaled approximately ¥6.02 trillion (around $44 billion), accounting for 28.3% of its total exports to the United States. With such a large share of earnings tied to the American market, a poorly timed price hike could risk eroding market share and severely impact the companies’ bottom line.

Auto Exports Drag Down Japan’s Trade Balance with U.S.

Despite helping preserve market share, Japanese automakers’ conservative pricing strategies are now weighing heavily on Japan’s trade balance with the United States. According to preliminary trade statistics released by Japan’s Ministry of Finance, exports to the U.S. in June fell 11.4% year-over-year to ¥1.707 trillion (approximately $10.8 billion), accelerating from an 11.0% decline in May and marking the third straight month of negative growth. The sharpest drop by value came from automobiles, down 26.7%. However, the number of units exported actually increased during the same period, reflecting a shift by Japanese manufacturers toward lower-priced models that are less exposed to tariffs.

As the downsides of holding the line on prices become clearer, Japanese automakers are ramping up local production and overhauling supply chains. At a press briefing in May, Mazda CEO Masahiro Moro remarked, “We’ve told our suppliers that we are switching into survival mode.” Jeffrey Guyton, the company’s CFO, also told shareholders at last month’s annual meeting that Mazda plans to increase production of vehicles in the U.S. to avoid tariffs. As of the fiscal year ending March 2025, over 30% of Mazda’s global sales—435,000 vehicles—depended on the American market.

Subaru, for its part, has announced plans to invest ¥40 billion (around $255 million) to expand production in the U.S. Honda, meanwhile, is exploring new avenues of cooperation with Nissan in the U.S. to minimize tariff exposure, even after formal merger talks between the two firms collapsed. If the partnership materializes, Nissan is expected to manufacture Honda-branded pickup trucks at one of its underutilized U.S. facilities.

U.S. to Lower Tariffs on Japanese Autos Amid Trade Agreement

While Japanese carmakers scramble to protect profitability under current trade conditions, analysts say their emergency measures may be short-lived. A recent U.S.–Japan tariff agreement is expected to ease much of the financial burden previously placed on automakers. According to reports by AP and Reuters, former President Donald Trump announced via Truth Social on July 22 (local time) that the U.S. has agreed to impose a 15% reciprocal tariff on Japanese automobiles—a significant reduction from the previously threatened 25% tariff, which was to take effect if talks failed by August 1.

“This deal will create hundreds of thousands of jobs and is unlike anything we’ve ever seen,” Trump claimed, adding that the U.S. would continue to maintain a “great relationship” with Japan. He also stated that Japan has agreed to invest $550 billion (approx. ¥86 trillion) in the U.S. and to open its markets to American cars, trucks, rice, and select agricultural products.

Japan’s public broadcaster NHK further reported, citing government officials, that the two countries had agreed to reduce the U.S. tariff on Japanese vehicles from 25% to 12.5%. This marks a notable policy shift by the U.S., which had previously applied uniform tariff rates across all trade partners. As a result, Japanese vehicles are now expected to face a total tariff burden of 15%, including the standard 2.5% base rate.

Rare calls emerge on Wall Street for Fed Chair Jerome Powell to resign
Fed's independence seen as increasingly vulnerable under pressure from a potential Trump administration
Concerns grow that Powell's dismissal could spark deeper turmoil in financial markets

Calls are emerging on Wall Street for Federal Reserve Chair Jerome Powell to resign in order to safeguard the central bank’s independence. As former President Donald Trump intensifies his broad attacks on Powell—citing issues such as the Federal Reserve’s building renovations—concerns are growing in financial markets, with some voices now suggesting that stepping down may be the best way to protect the institution.

El-Erian Sparks Debate with Resignation Proposal

On July 22(local time), Mohamed El-Erian—President of Queens’ College at the University of Cambridge and advisor to Allianz Group—argued in a post on X (formerly Twitter) that Federal Reserve Chair Jerome Powell should step down if his goal is to defend the institution’s operational autonomy, which El-Erian called “essential.” A former CEO of bond giant PIMCO, El-Erian is widely regarded as one of the most influential economists on Wall Street.

“I understand that my view runs counter to the prevailing opinion that Powell should remain in office through his term ending in May next year, and I’m not suggesting it’s the ideal option,” El-Erian wrote. “But it may still be better than the current situation, where threats to the Fed’s independence are growing and spreading.” His remarks are being interpreted as a call for Powell to voluntarily resign in the face of escalating pressure from the Trump campaign, which has repeatedly demanded aggressive rate cuts and taken aim at Powell personally.

El-Erian also noted that market reactions may remain stable, saying that most of the frequently mentioned candidates to succeed Powell are capable of reassuring investors. Current contenders include former Fed Governor Kevin Warsh, former White House economic advisor Kevin Hassett, Treasury Secretary Scott Besent, former World Bank President David Malpass, and current Fed Governor Christopher Waller.

White House Increases Pressure on Powell Amid Renovation Controversy

The sudden emergence of resignation calls—even within pro-Powell circles on Wall Street—has been largely attributed to a growing controversy over the Federal Reserve’s expensive building renovation. On July 10, Russell Vought, Director of the White House Office of Management and Budget (OMB), sent a letter of protest to Powell, accusing the Fed of potentially violating federal regulations by spending excessively on its headquarters remodeling.

According to the White House and some Republican lawmakers, the total cost of the renovation ballooned by $700 million to $2.5 billion, due to additions such as a rooftop garden, artificial waterfalls, VIP elevators, and marble interiors. Vought also claimed that the Fed failed to report the budget overruns and related changes to the National Capital Planning Commission (NCPC), a federal oversight body.

Analysts say the White House may be using the scandal as a pretext to justify Powell’s dismissal. “The Federal Reserve Act protects the central bank’s independence by prohibiting the president from removing board members without cause,” said one market analyst. “However, if allegations of misconduct or corruption arise, dismissal before the end of a term becomes legally possible.” The analyst added, “This appears to be a trap set by the Trump campaign to undermine Powell. Rather than allow continued erosion of the Fed’s authority, Powell’s resignation could send a stronger signal in defense of institutional integrity.”

According to media reports, former President Donald Trump shared a draft letter outlining Powell’s dismissal with Republican lawmakers during a private meeting at the Oval Office on July 15. During the informal session, Trump is said to have openly expressed his dissatisfaction with Powell and sought attendees’ opinions on whether he should move forward with the termination.

Market Turmoil Follows Powell Ouster Rumors

Despite growing speculation, some analysts believe it remains unlikely that former President Trump will actually proceed with removing Jerome Powell. Replacing the Fed Chair is seen as an extreme move that could trigger significant disruption across U.S. financial markets. Indeed, on July 16—following reports that Trump had actively discussed Powell’s dismissal—U.S. equities, the dollar, and long-term Treasury bond prices all fell sharply (with corresponding spikes in yields), while short-term Treasury prices rose, sending yields downward. The reaction reflected broad and immediate shock across markets.

In the wake of the backlash, Trump quickly denied that he was planning to fire Powell. On July 22, Treasury Secretary Scott Besent also sought to calm speculation, telling Fox Business Network that “there is no reason for him [Powell] to step down right now,” and that “his term runs through next May, and if he wants to finish it, I think he should.” The statement sharply contrasted with Trump’s previous stance advocating for Powell’s early removal.

Markets interpreted Besent’s remarks as a signal of respect for the Fed’s independence. In response, yields on 10-year U.S. Treasury bonds retreated to the low 4.3% range, and the dollar weakened in global foreign exchange markets. The U.S. Dollar Index (DXY) dropped to as low as 97.303—the lowest level since July 10—leading to declines in the dollar’s value against other major currencies, including the Korean won, euro, yen, and Chinese yuan.

Largest Single-Nation Investment in AZ’s History
European Pharma Rushes to Expand U.S. Supply Chains
A Direct Response to Reshoring Demands and Tariff Risk

UK-based pharmaceutical giant AstraZeneca(AZ) has announced plans to invest $50 Billion in building a large-scale drug manufacturing complex in the United States, focused on next-generation therapeutics. AZ is not alone—numerous biotech and pharmaceutical companies are ramping up their U.S. operations, signaling a shift toward more aggressive localization strategies. Industry analysts suggest the surge is tied to former President Donald Trump’s recent comments threatening to impose tariffs of up to 200% on imported pharmaceuticals. Even in the absence of formal measures, the pressure to reshore production appears to be materializing in real time.

Realigning Global Manufacturing and Strengthening North American Supply Chains

AstraZeneca announced on July 21 (local time) that it would invest 50 Billion in the United States through 2030 to expand manufacturing and R&D facilities. The company aims to consolidate its position in the U.S. market while responding proactively to rising policy uncertainties. “This investment brings us closer to our target of $80 billion in annual revenue, about half of which we expect to generate in the U.S.,” AZ stated.

At the center of the investment is a new active pharmaceutical ingredient (API) production facility in Virginia. This plant will incorporate advanced technologies such as artificial intelligence, automation, and data analytics, and will produce APIs for metabolic and weight management drugs, including GLP-1 oral treatments, baxdrostat, oral PCSK9 inhibitors, and other complex small molecule therapies. A multi-product platform will enable rapid-response manufacturing—a key capability emphasized by the global pharmaceutical industry in the post-COVID era.

AZ expects the Virginia facility to create as many as 3,000 jobs over the next five years. Virginia already boasts a robust biotech and pharmaceutical infrastructure, with access to high-skilled research talent and favorable logistics, making it an increasingly attractive hub for global production. Leveraging these regional advantages, AZ aims to build a stable manufacturing base while enhancing supply chain resilience across North America.

The state government of Virginia has also pledged its full support for the project. Governor Glenn Youngkin praised AZ’s decision, saying, “We’re grateful to AstraZeneca for choosing Virginia as the foundation for this innovative U.S. investment. This project sets a new standard in pharmaceutical manufacturing technology, creates thousands of highly skilled jobs, and strengthens America’s supply chain resilience.”

European Drugmakers Accelerate U.S. Localization Drive

AstraZeneca isn’t the only European pharmaceutical company ramping up investment in the United States. In April, Swiss pharmaceutical leader Novartis announced a $23 billion investment plan over five years—the largest facility expansion in the company’s history. The strategy centers on scaling up domestic production of core therapies, including cancer and rare disease drugs, at high-tech facilities across the U.S.

Novartis plans to renovate multiple existing production sites and build new state-of-the-art plants in select regions. The company also plans to spend $1.1 billion to establish an R&D hub in San Diego, aiming to enhance connectivity between research and commercial manufacturing and accelerate time-to-market for new drugs. As part of this initiative, Novartis will also strengthen its ties to the U.S. clinical trial network. Industry observers interpret the plan as a long-term effort not just to expand manufacturing, but to embed deeply within the broader U.S. pharmaceutical ecosystem.

Around the same time, Swiss pharmaceutical firm Roche unveiled a $50 billion U.S. investment plan. Other major players—including Eli Lilly, Johnson & Johnson, and Sanofi—have also announced substantial expansions of their U.S. operations. Their shared goal: to increase influence in the world’s largest pharmaceutical market and respond proactively to an evolving regulatory landscape.

Trump’s 200% Tariff Threat Stokes Industry Anxiety

Yet a closer look reveals a clear policy undertone behind the investment wave: the Trump administration’s aggressive reshoring agenda for the pharmaceutical sector. Even during his presidential campaign, Trump consistently argued that any drug sold in the U.S. must also be manufactured domestically, demanding companies establish U.S.-based production within 18 months. At a cabinet meeting on July 8, Trump went further, warning, “We’ll impose tariffs of up to 200% on imported pharmaceuticals.”

Industry experts interpret the statement as a warning shot aimed not just at imports but at compelling companies to move production back to U.S. soil. After the cabinet meeting, Commerce Secretary Howard Lutnick told reporters that results of an investigation under Section 232 of the Trade Expansion Act—focusing on pharmaceuticals and semiconductors—would be announced by the end of the month. Section 232 allows the government to impose high tariffs and restrict import volumes if a product is deemed a threat to national security.

Historically, Trump’s tariff threats have proven to be powerful drivers of corporate action. Following his election victory late last year, SoftBank pledged a $100 billion U.S. investment, promising to create at least 100,000 jobs. Hyundai Motor Group similarly announced plans to expand U.S. factory operations in direct response to tariff warnings. Market analysts view the pharmaceutical industry’s recent moves in a similar light. While no formal tariffs have yet been imposed, the mere possibility is already shaping corporate investment decisions. Observers increasingly describe the industry’s response as ‘an effective concession under political pressure.