Japan Auto Union refuses to ease wage demands as tariffs hit profits

Japan’s biggest auto workers’ union says it will not soften its wage demands next year, even as U.S. tariffs hit company profits and force the industry into what leaders call a “critical moment.”

Akihiro Kaneko, head of the Confederation of Japan Automobile Workers’ Unions (JAW), told Reuters the group must protect workers as rising prices erode earnings.

Union says wage cuts not an option

Kaneko said real wages are still falling, even after strong pay gains this year. “With inflation persisting and real wages still lagging, there’s no option to enter next year’s talks with a weaker stance,” he said.

The auto sector faces a profit drop of about 30% this year due to higher U.S. tariffs. But Kaneko said stopping wage growth now would break the country’s “positive cycle” of higher pay, stronger spending, and faster growth. “This year is about making that cycle last,” he said. “Lowering our push is out of the question.”

Auto sector feels pressure from tariffs

In September, Washington and Tokyo agreed to a new trade deal with a 15% baseline tariff on most Japanese imports. That replaced an earlier 27.5% tariff on autos and planned 25% duties on other goods.

Automakers say the new structure still hurts earnings because the U.S. remains Japan’s largest car export market.

JAW represents 12 unions and 784,000 workers, including staff at Toyota, Honda and major parts suppliers. This year, member unions secured an average monthly wage rise of 4.94%.

BOJ watches talks closely

The auto industry supports more than 5 million jobs in Japan and often sets the tone for national wage talks. Bank of Japan Governor Kazuo Ueda said the central bank needs “a bit more data” to confirm companies will continue raising pay despite weaker profits.

He said the BOJ is watching the auto sector closely as it weighs its next interest rate hike.

Kaneko said the union is ready to work with companies on ways to boost profits, including fairer pricing so suppliers can raise wages too.

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