Japan aircraft parts makers bracing for possible US tariff
Japanese commercial aircraft parts makers are bracing for a possible additional tariff on such goods being considered by the administration of US President Donald Trump.
High levies may cause US airplane maker Boeing Co. to urge Japanese companies it buys parts from to shoulder some of the burden.
Japanese makers are responsible for about 35 pct of Boeing's 787 aircraft. Mitsubishi Heavy Industries Ltd. manufactures the plane's main wings, Kawasaki Heavy Industries Ltd. the forward fuselage, and Subaru Corp. the centre wing box.
IHI Corp. supplies engines, while Toray Industries Inc. provides carbon fibre. It is impossible for Boeing to produce aircraft without Japanese companies.
Japanese makers produce the parts in Japan, and the buyer, Boeing, pays tariffs for imports to the United States.
An additional levy may spur Boeing to reflect higher costs in the selling prices of aircraft, passing on the burden to airlines. Still, a Mitsubishi Heavy official mentioned a need to "think about the risk of suppliers being asked" to bear some of the costs.
Boeing is suffering chronic red ink due to quality issues and mass strikes stalling production. Trump's effort to revive the U.S. aircraft industry through the additional tariff is expected to deal a further blow to the company through higher procurement costs.
"We don't understand what Trump wants to do," a Japanese government source said.
Due to the uniqueness of aircraft-related technologies, it is not easy to transfer production to the United States.
"For the United States, it's just disadvantageous," an official at a major parts maker said of the possible levy, showing expectation that Washington will give up the idea.
"We ask the government, which is negotiating (with the United States), to limit the impact on small businesses," said an official of the Aichi prefectural government in central Japan, home to many aircraft parts makers.
[Copyright The Jiji Press, Ltd.]
