WASHINGTON -- With the White House seeking to finalize a trade treaty deal by year end, Japanese automakers and the Detroit 3 are embroiled in a good old-fashioned trade war.
President Obama has thrown his weight behind negotiations on the Trans-Pacific Partnership, an attempt to create a 12-country free-trade zone around the Pacific Rim. Such a deal likely would start the clock on a slow phase-out of U.S. tariffs on imported cars, a vestige of the days when Hondas, Toyotas and Nissans rolled off freighters rather than U.S. assembly lines.
Japanese manufacturers see a trade agreement as a chance to get rid of the "chicken tax," a 25 percent U.S. tariff that makes it uneconomical to import pickup trucks from Japan. But U.S. automakers are resisting, arguing that Japan should not be rewarded when its car market is virtually closed to U.S. imports.
As the negotiations head into their final rounds, both sides are making their final pitches.
Last month, spurred by automakers such as Ford Motor Co., 60 U.S. senators signed a letter that called on the White House to take a hard line on currency manipulation in trade deals -- a veiled jab at Japan, which has taken anti-inflationary measures that have weakened the yen and helped its exporters.
"You will never find American politicians talking about changing the value of the dollar to spur exports," said Matt Blunt, the former Missouri governor who as head of the American Automotive Policy Council is leading the charge in Washington on behalf of the Detroit 3. "It happens all the time in Japan."
Japanese brands hit back last Tuesday, in the form of a letter to the president from Rep. Alan Nunnelee of Mississippi and Rep. Pete Gallego of Texas, spotlighting the economic value of the U.S. dealerships and assembly plants that Japanese brands support. Both lawmakers represent districts that are home to Toyota assembly plants.
"We wanted to remind the president of the significant contributions these automakers and dealers make to our nation's economy each day," Nunnelee said.
Behind the activity on Capitol Hill is the fact that any trade deal hammered out by the Obama administration will need to pass Congress.
Japanese automakers worry that powerful lawmakers sympathetic to the Detroit 3 and the UAW, such as Sen. Carl Levin of Michigan, could try holding up a trade deal if auto-related demands are not met. They would like to see the pact put on a fast track to the president's desk, with no chance for amendments that could undermine the phase-out of tariffs.
A group called Trade Benefits America -- whose members include Honda, Toyota, Daimler and the American International Automobile Dealers Association -- is leading that lobbying effort for fast-track status.
The Japanese companies have less at stake on the tariff question than they did in the 1970s, now that they make most of their U.S.-bound vehicles in North America. But every month that those tariffs stay in place costs them millions of dollars.
Consider the Toyota Prius, one of the best-selling cars in the United States still exclusively produced outside North America.
Toyota sold 186,756 units of the Prius, Prius C and Prius V through the first nine months of 2013. All three variants are imported from Japan and face a 2.5 percent passenger-car tariff at U.S. ports. Assuming an average taxable value of $25,000 for the cars, Toyota's tariffs for the Prius nameplate would average $625 per car, or nearly $117 million in the first nine months of this year alone.
Fritz Hitchcock, a Southern California car dealer with three Toyota stores, said an end to tariffs would likely help his sales.
"Will the dealers make more money per car? Probably not," Hitchcock said. "I think the consumer would be the big winner."