Mazda and Japan’s auto industry brace for tariff impact amid growing economic stress and uncertainty in major production regions. In Hiroshima, where Mazda is based, many now fear a harsh industrial slowdown driven by U.S. tariff threats.
Ryosei Yamaguchi, president of the 110-year-old Nanjo Auto Interior, warns of serious consequences. “If Mazda slows production, we lose orders,” he said. “Our challenge is staying profitable with fewer volumes.”
Hiroshima, located 800 kilometers southwest of Tokyo, depends heavily on Mazda’s continued success. However, President Donald Trump’s proposed 25% auto tariff threatens that foundation. With Japan’s upper house election nearing, voters are anxious about inflation and economic stagnation.
Consequently, public trust in Prime Minister Shigeru Ishiba continues to decline. He has not secured a U.S. tariff exemption, despite Japan’s longstanding alliance with America. “I’m past frustration,” Yamaguchi added. “I’ve simply accepted it.”
Meanwhile, Mazda has already experienced sharp declines in U.S. sales—18.6% in May and 6.5% in June. The company remains vulnerable, since it relies heavily on imports for American sales. Although Japan’s tech dominance has faded, its auto industry still makes up 28% of exports to the United States.
Moreover, a July survey by Teikoku Data Bank found that over 68,000 companies operate in Japan’s auto supply chain. Together, they employ 5.6 million workers—roughly 8% of Japan’s entire labor force. “A broken supply chain is hard to rebuild,” said Hiroshima-based analyst Hideki Tsuchikawa.
So far, Mazda has not issued a full-year earnings forecast due to tariff uncertainty. However, the company has promised support for employees, suppliers, and dealers. “We anticipate short-term damage,” it stated, while confirming its request for government assistance.
Now, Mazda and Japan’s auto industry brace for tariff impact with budget cuts and tighter operations. In Fuchu, near Mazda’s HQ, bar owner Koji Sasaki sees business slowing. “No overtime means no drinks,” he noted. Many regulars apologize for visiting less often.
Inside the company, staff also feel the effects. Travel budgets are limited. Junior employees miss important field experience. “Experience suffers,” said Akira Ichigi, a 32-year-old staffer.
In response, Mazda formed a weekly strategy team to address tariffs. Yet labor shortages in the U.S. restrict any plans to increase output at its Alabama plant, which it co-operates with Toyota. As a result, the company now reviews all travel, staffing, and supply coordination plans to meet U.S. demand.
Nevertheless, Yamaguchi believes long-term thinking is essential. He compared the current downturn to the COVID-19 slump. His firm lost money in 2020 but recovered by focusing on efficiency rather than layoffs. “Without investing in 2025, we might miss future opportunities,” he warned.
Ultimately, Mazda and Japan’s auto industry brace for tariff impact during a period of shifting trade policy and fragile domestic politics. How they respond could shape the future of Japan’s core manufacturing sector.
