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Much cheaper cars soon for everyone. Thanks to TPP.

Updated: Mar 9, 2018



The import tariff on Japanese and South Korean cars will be completely removed very soon - bringing price cuts to almost half of all cars imported into Australia, Canada and other TPP partner-countries. Strategy Inc estimates savings starting from 5% to 25% and to a whopping 40% on spare parts.


The Trans-Pacific Partnership trade pact (TPP Agreement), which had been on life support since Trump's withdrawal, being trumpeted as a jobs boom for Australia, now signed, it includes huge environmental protection strategies.


The 11 Pacific-rim countries have signed a tweaked agreement on March 8, 2018 in Chile. Australia’s Prime Minister, Malcolm Turnbull, said on Wednesday it was a "big deal" for the Australian economy. "It will mean billions of additional exports and thousands of additional jobs," he said in Brisbane.


Originally, Canada threw a spanner in the works at an APEC leaders summit in Vietnam last year, derailing efforts to finalise the deal. But Ottawa has since been coaxed back to the fold following lobbying efforts by Tokyo and Canberra.


Speaking at the World Economic Forum in Davos, Switzerland this week, Canadian Prime Minister Justin Trudeau called the agreement the "right deal".


A Toyota spokesman says 'in some cases we've passed on more than the duty saving". One of the most compelling arguments heard in Canada for TPP was that, without it, Japanese car-makers would stop investing in Ontario plants. TPP raises efficiency in Japanese plants in the US, Australia, Canada, Mexico, Malaysia, and Vietnam.


The Pacific-rim countries, including Japan, have negotiated TPP, designed to eliminate trade barriers and create new trade opportunities. This is an issue that is affecting various industries, including the automotive industry. The Japan Automobile Manufacturers Association (JAMA) has stated that the Japanese auto companies are global—they manufacture or sell almost everywhere, including in all the countries negotiating the TPP. So free and open trade is vital to their success. Japan’s participation in TPP has the potential to reduce trade barriers, make cross-border manufacturing more efficient, lower costs, and benefit consumers. For our companies, this kind of trade liberalization is definitely a “win-win.”


For instance, if TPP makes Japanese plants more efficient in Canada, it will contribute to an expansion of Toyotas and Hondas exported from Canada to countries inside and outside of TPP, in part at the expense of the exports of Japanese or EU-made Toyotas and Hondas. This in turn will affect the degree of competition in non-members, generating more reactions by European brands, but also Japanese and US companies operating in Europe.


All frictions considered, we predict the Trans-Pacific Partnership will bring considerable disruption to the industry, while offering sizeable gains for car buyers.


Australia’s Trade Minister Steve Ciobo says the overall deal will eliminate 98 per cent of tariffs in an 11-nation marketplace worth close to $14 trillion. "It hasn't been easy, but we're finally at the finish line and Aussie businesses will be the big winners," he told AAP.


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