Donald Trump isn’t the only president who is fixated on imported cars
On the evening of March 4, President Donald J. Trump made his first address to a joint session of Congress since returning to power, treating it as an opportunity to rattle off a long list of accomplishments during his first 43 days in office. In between extended, raucous pauses for applause, the President touched on a number of topics, including national security, cultural and social issues, and the economy, with a special focus on tariffs.
During the middle of his 1 hour and 40-minute speech, the President made a bold claim about the American auto industry. He declared that under his tariff-heavy economic plan, “we’re gonna have growth in the auto industry like nobody’s ever seen,” adding “that [auto] plants are opening up all over the place” and “deals are being made.” In addition to claims about the tariffs’ benefits for the American auto industry, he took credit for an announcement from Honda, claiming it as proof of additional domestic auto manufacturing investment.
During his address to Congress on Tuesday night, President Trump said Honda had plans for a new plant in Indiana, but the company clarified it has made no such announcement. https://t.co/wiwJSl0cdj
— WRTV Indianapolis (@wrtv) March 5, 2025
“In fact, already, numerous car companies have announced that they will be building massive automobile plants in America, with Honda just announcing a new plant in Indiana, one of the largest anywhere in the world,” Trump said.
Earlier the same day, Reuters reported that Honda will make its next iteration of the Civic hybrid at its current Greensburg, Indiana plant, instead of in Mexico to protect it from planned U.S. import tariffs. According to Honda insiders who spoke to Reuters, the automaker planned to make the new one in Guanajuato, Mexico, beginning in November 2027 due to rising costs in Indiana and Canada, which it eventually reevaluated due to the tariff threat.
While President Trump praised Japanese automakers for helping grow American manufacturing and industry, decades before, they were targets in a similar trade scuffle that framed companies like Honda, Toyota, and Nissan as part of an unwelcome invasion into a market desperate to adopt something new.
Years of Crisis
1981 was a heck of a year for the United States. President Ronald Reagan was inaugurated, MTV started to air, the first Space Shuttle mission took place, Donkey Kong rolled out into American arcades, and the U.S. economy fell deeper into a recession. Just a year prior, the U.S. auto industry was sinking deeper into a dark hole that started to cave in the late 1970s due to some major disasters that shocked Americans.
First, events in post-revolutionary Iran triggered the 1979-1980 oil crisis, which sent gas prices soaring. Imported oil got even more expensive for refiners, and at the same time, President Carter accelerated gas prices when he started lifting price controls on domestic oil. The rising cost of oil during those two years pushed inflation into the double digits, forcing central banks like the Fed to adjust interest rates to record highs. While it did a lot to curb inflation, it also triggered a brutal recession that was the worst since the Great Depression.
These events triggered a crisis for Detroit’s Big Three, as General Motors, Ford, and Chrysler faced disastrous financial difficulties. In 1980, they collectively lost a record $4.2 billion, while sales that year dropped by a third to the lowest level since 1961. As a result of these woes, an estimated 300,000 to 500,000 workers in auto factories and automaker suppliers were given pink slips or furloughed, sending membership of the United Automobile Workers (UAW) union to decline by about 40%. Chrysler was hit the hardest, and in 1980, it accepted a $1.5 billion loan from the federal government to keep the struggling automaker from folding.
During this time, not a lot of Americans purchased new cars, but if they did, it was probably a smaller, imported Japanese car from Datsun, Toyota, or the newer kid on the block: Honda. According to a May 1980 report from The New York Times, Toyota’s U.S. shipments “rose 25 percent” within the first four months that year. Despite the clear and present danger, Detroit’s automakers failed to react and alter their production lines fast enough to meet the growing demand for smaller cars. Between 1978 and 1980, the U.S. automakers lost more of their share in the market, as sales of small cars in the United States increased by a third.
Nissan
The Blame Game
Much like how President Trump has blamed and targeted other countries like China and South Korea for the economic woes faced by everyday Americans, the economic boogeyman in the early ’80s was Japan. While visual elements of Japanese culture and its unique cuisine were being injected into modern, cosmopolitan life during the period, the visual dominance of Japanese companies in key industries like electronics, steel, shipbuilding, textiles, and especially cars led American politicians, workers, and the general public in middle America to lament the land of the rising sun.
In an October 2024 appearance on the Fully Charged Show podcast, Farley compared the rise and domination of Chinese EV firms like BYD and Xiaomi to that of Toyota in the ’80s and ’90s. In a personal aside, he recalled that during his 20-year stint at Toyota, the automaker’s American presence evolved to the point that it affected his relationship with his family on a personal level.
“I worked there for 20 years. My family was not happy; they wouldn’t talk to me here in Detroit because they were ashamed that I worked [at Toyota],” Farley said. “It was a huge social cost in the Midwest of the U.S. for the success of Toyota. So many jobs were lost, including many people in my family. I can’t unlearn that as a young man. I can’t unlearn the fact that the Detroit Three never really had a plan [to tackle Japanese automakers] and [Ford] is not gonna miss this one.”
It was within this environment that matters with Japan got increasingly political. In February 1980, UAW President Douglas Fraser went over to Japan to encourage Japanese automakers to impose voluntary restraints on their exports and convince them to set up shop in the States in an effort to keep Americans employed. However, no Japanese automaker at the time was willing to begin building cars in what was a mysterious business environment that was a radical mismatch from what they were used to in Japan.
By July of the same year, the UAW and Ford implored the U.S. International Trade Commission (ITC) to investigate whether increased imports of Japanese cars were a “substantial” cause of economic injury to the auto industry, using Section 201 of the Trade Act as their basis. However, in November, the ITC commissioners determined through a three to two vote that the U.S. automobile industry’s economic problems were, in fact, caused by the drop in new car sales induced by the 1980 recession and the U.S. car industry’s inability to meet the increased demand for fuel-efficient cars.
Though the non-partisan, independent government agency determined that it was not, in fact, increased imports of Japanese cars that caused their troubles, the rhetoric, message, and lasting image of doom had already damaged the American psyche. It even became an issue during the 1980 presidential election. In fact, at a campaign stop at a Michigan Chrysler plant in September 1980, the candidate Reagan promised auto workers that he would do his best to put a cork in the Japanese nozzle to stop them from further flooding the US auto market.
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“There is a place where government can be legitimately involved, and this is where I think government has a role it has shirked so far, and that is to convince the Japanese one way or another, and in their own best interest, the deluge of cars into the United States must be slowed while our industry gets back on its feet,” the eventual President said.
Although a bipartisan coalition of congressional lawmakers at the time was foaming at the mouth to apply all types of trade restrictions and tariffs on the Japanese, nothing dramatic actually happened. In fact, during President Reagan’s first few months in office, the Reagan Administration applied pressure on Japan’s Ministry of International Trade and Industry (MITI) to impose its own limit on automobile exports to the States. What came out was something called the Voluntary Export Restraint (VER), a sort of “gentleman’s trade agreement” between the U.S. and Japan that took effect on May 1, 1981.
Under the VER agreement, Japanese officials set their own limit on the number of vehicles that Japanese manufacturers could send on boats to the United States every year. From 1981 to 1983, they enacted a quota of 1.68 million exports, rising to 1.85 million cars in 1984. In 1985, Japan agreed to extend the VER agreement through 1992 with a threshold of 2.3 million cars per year.
Toyota
As a result of the agreement, the price of Japanese cars in the U.S. naturally rose as the quota kept demand very high. However, this didn’t mean that domestic manufacturers lowered their prices amid less competition; the price of American cars climbed during this period. In addition, this period led some Japanese automakers to begin exploring and considering U.S. local manufacturing to avoid export restraints.
Honda leads the charge in U.S. manufacturing
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Honda was the first Japanese auto manufacturer to begin building cars in the United States, as its Marysville Auto Plant in Marysville, Ohio, began making cars on Nov. 1, 1982. In an interview with CNN, Shige Yoshida, the former vice president of American Honda, said that he first began looking at sites for the plant in 1975 and that Honda chose Marysville because of a favorable investment climate, its close vicinity to a test track and proving grounds in nearby East Liberty, Ohio and most of all, the people.
“I sat in many family restaurants, in many states, studying the people,” Yoshida is recalled by the Columbus Dispatch as saying in a 2018 speech to the Columbus Rotary. “I was impressed by the people in Ohio.”
By 1987, the Marysville plant began making cars destined for export to Japan. Honda was so proud of its U.S.-made cars that it began sticking badges on the B-pillar of its Accords featuring an eagle crest that proudly showed off that their “U.S. Coupe” or “U.S. Wagon” were made by Honda of America.
Currently, Honda’s Marysville Auto Plant is one of the key facilities being reworked to become part of the automaker’s integrated EV Hub centered around its facilities in Ohio. In April 2024, Honda showed off its reworked assembly lines at Marysville, which will make it capable of making conventional-engined cars, hybrids, and EVs at the same factory.
Other Japanese manufacturers followed Honda in opening their own factories in the United States. Nissan opened up its Smyrna, Tennessee plant in 1983, Toyota opened its Georgetown, Kentucky assembly plant in 1988, while Subaru opened its Lafayette, Indiana plant in 1989. According to the Japan Automobile Manufacturers Association, over 110,000 people are directly employed by Japanese automakers. Since 1982, Japanese automakers have made more than 100 million vehicles in the United States, and a Japanese automotive brand makes one out of every three vehicles made in the States.
Final Thoughts
As the American auto industry grapples with President Trump’s complicated and stiff tariffs on imported cars and car parts, it is important to know that there is more to a certain car’s story and origin beyond the badge tacked onto it. According to the latest AALA report by the NHTSA for the 2025 model year, some of the cars with the largest US/Canada parts content sold in the United States are Hondas.
In a CNN report published during the last Trump administration in 2019, experts like Rutgers economics professor Thomas J Prusa noted that Trump’s isolationist tactics could be devastating for the American economy. “With history as a guide, a tight quota on Japanese auto produced cars or auto parts will hurt not just American consumers, but also American firms,” Prusa said. “That’s because many American jobs are tied to the supply chain that comes from Japan.”
