The 2006 Increase in U.S. Motor Vehicle Imports from Japan

Publication Date: March 2007

Publisher: Library of Congress. Congressional Research Service

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Research Area: Manufacturing and industry

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Abstract:

Imports of motor vehicles (automobiles and light trucks) from Japan increased by one-third in volume from 2005 to 2006, rising to more than two million units, the highest yearly total since 1989. Some Members of Congress have expressed concern that the export of cars from Japan to the U.S. market has been assisted by a policy of the Japanese government to reduce the exchange rate of the yen. This could give producers based in Japan a trade advantage when they export vehicles to the U.S. market, in competition against those made in the United States. Alternative factors that may also explain the 2006 import increase are rising sales of imported subcompact vehicles, which are not built in the United States by any manufacturer, and a shortage of U.S. manufacturing capacity by two leading Japanese-owned automotive manufacturers. Toyota and Honda are now rapidly expanding their North American production, a development that may reduce net imports, but could further increase the competitive pressure on the Detroit-based "Big Three" manufacturers.