Japanese automobiles remain among the most popular car brands on the planet, and comprise a leading category of imported products in international trade.
Top automotive manufacturers from Japan include Honda, Isuzu, Kawasaki, Mazda, Mitsubishi, Mitsuoka, Nissan, Subaru, Suzuki, Toyota and Yamaha.
In 2009, deliveries of Japanese passenger cars dropped by 41.7% in the United States and fell by 30.6% in Canada.
Despite the recent controversy surrounding Toyota vehicle recalls, Japanese imported cars remain well-positioned to grow their international trade sales.
Sales of Japanese Imported Cars to USA
During 2009, Japanese car makers shipped US$24.1 billion worth of imported passenger vehicles to American importers. Just one year earlier, Japan had exported $41.3 billion in Japanese automobiles to the U.S.
Then again, most domestic and foreign automobile companies suffered dramatic sales declines last year. For example, Chinese auto makers sold 47.5% fewer passenger cars to America last year. American car exports to all countries were down by 44.5%.
Although Japanese car imports to the U.S. also slid by over 40%, Japan is still America’s dominant supplier of automobiles shipped from the Pacific-Rim.
Japanese cars represented 77% of all automobiles that the U.S. imported from Pacific-Rim countries in 2009. Car sales from Japan were far ahead of second-place South Korea’s $6.5 billion, Australia’s $115.4 million and fourth-place China’s $97.9 million in passenger car sales to America.
Japan's Passenger Car Imports to Canada
Canada paid US$3.2 billion for automobiles imported from Japan in 2009. The comparable statistic for 2008 was $4.6 billion, almost a third higher.
But to put that decline into perspective, imports of American-made automobiles into Canada fell by 40.6%. The overall slide for car exports from all countries was 32.8%. These steeper declines in foreign car sales to Canada mean that Japanese car makers actually gained market share by avoiding above-average decreases in their car imports.
In total, Japanese imported cars generated 18.8% of the $17 billion in sales that Canadian importers paid for passenger cars delivered from all countries during the year.
Tariff Duties on Automobiles Imported from Japan
Imported Japanese cars also provide customs duty revenues for both the American and Canadian governments.
For passenger cars, the 4-digit prefix for the applicable harmonized system code (HSC) is 8703. Under that code prefix, most sub-classifications for passenger vehicles originating from Japan are subject to a 2.5% customs duty on the shipment’s dutiable value. That value excludes insurance and most shipping charges.
Canada Borders Services Agency (CBSA) charges an even higher tariff of 6.1% on Japanese passenger car imports. Shipments of automobiles from Japan are assessed this charge under the Most Favoured Nations (MFN) tariff, since Canada and Japan have not entered into a general or special tariff agreement that would lower or waive duties.
The only exception is recreational or sporting vehicles specifically designed for travel on snow under HSC 8703.10.10.00. Those specialty vehicles are duty free even when supplied from Japan.
Competitive Trade Advantages for Japanese Passenger Cars
Despite the additional expense of tariff duties, Japan demonstrated strong competitive advantages in trading passenger cars with both its American and Canadian trade partners.
The math is simple. Japan sold $24.1 billion worth of Japanese cars to the U.S. in 2009 while paying just $288.7 million for imported American cars. Japan’s trade advantage over the U.S. amounted to about $23.8 billion in net exports.
Canada exported only $12.9 million worth of Canadian-made vehicles to the Land of the Rising Sun last year. That figure is a miniscule percentage of total Canadian passenger car exports of $23.3 billion for 2009.
Compared with Canada’s $3.2 billion in imports of Japanese automobiles, Japan posted a competitive trade advantage of over $3 billion in passenger cars traded with the Great White North.
Sources: United States International Trade Commission’s Interactive Tariff and Trade DataWeb, Industry Canada's Trade Data Online, based on Statistics Canada reports as of February 24, 2010, United States International Trade Commission Harmonized Tariff Schedule, and Canada Border Services Agency's online customs tariff manual.
Daniel Workman - A senior business and finance writer who also does French translations, notably international trade and insurance materials.
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