Tariffs put auto supply chain at risk

They threaten smaller parts companies that are key to manufacturing and employ hundreds of thousands in Japan, South Korea and Germany, write River Akira Davis, Jin Yu Young and Melissa Eddy from Tokyo, Seoul and Berlin

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In a factory in Hekinan, a seaside town southwest of Tokyo, machines spit hot metal rods into baskets.

On a recent Monday, afternoon light poured in through yellowed windows, and the air inside was hot and smelled of metal shavings.

The plant, operated by an 84-year-old Japanese automotive parts maker, Asahi Tekko, produces components that are fitted into Lexus and Land Cruiser models at nearby Toyota factories. Many of those vehicles are then shipped to the United States.

For decades, the route has been one of many supply lines that underpin the automotive industry. Now, however, it is a source of unease for Asahi Tekko, as the company grapples with recent fluctuations in US trade policies.

When President Donald Trump laid down a 25% tariff on Japanese automobiles and parts this year, Tetsuya Kimura, the CEO of Asahi Tekko, thought, "Is he actually going to do something like that?" Mr Kimura recalled. He added, "The thinking seemed so oversimplified."

Asahi Tekko has not yet felt the full effect of the tariffs, which are to be set at 15% as part of Japan's recent trade agreement with the Trump administration. Still, the uncertainty is unnerving. Mr Kimura fears they could hurt American demand for cars and cut the need for his parts.

"When it comes to how much impact these tariff rates will have, we don't have a calculus," he said.

Under the Trump administration, virtually all of the world's largest automaking countries are subject to double-digit tariffs on automobiles and auto parts. While big foreign manufacturers of cars, such as Toyota, have the profits to absorb the added costs, industry experts expect a more devastating effect on the dense networks of auto parts suppliers that make everything from pistons to wiring.