Courtesy of Benzinga
The details of a new U.S.-Japan trade deal aren’t yet fully public, but a deal is likely to avoid high tariffs on cars exported from Japan, which would be good for Japanese car makers, Bank of America Merrill Lynch said Tuesday.
Japanese foreign minister Toshimitsu Motegi and U.S. trade representative Robert Lighthizer met in New York Monday and announced the two sides had reached an agreement on a trade deal, though without disclosing all the details.
“Our view is that Japan would have been unlikely to agree to an arrangement that imposed high tariffs on vehicle exports from Japan,” Bank of America Merrill Lynch analyst Kei Nihonyanagi said in a Tuesday industry note.
“Accordingly, we believe the reaching of an agreement likely means that Japan secured some kind of commitment.”
Motegi had said that he had intended to secure assurances that the U.S. wouldn’t impose additional tariffs on vehicles, and said in a press conference Monday that there was no cause for concern in the agreement.
Formal Agreement Expected This Week
Japanese Prime Minister Shinzo Abe is expected to meet with President Donald Trump this week in the United States and formally confirm the agreement.
Nihonyanagi continues to have Buy recommendations on Subaru Corp. /ADR (OTC: FUJHY) and Toyota Motor Corp. (NYSE: TM), and an Underperform rating on Mazda Motor Corp ADR (OTC: MZDAY) and Nissan Motor Co Ltd (OTC: NSANY).
Additional provisions in the agreement beyond tariffs could affect Toyota, including whether there are volume restrictions, or requests to move to local production of certain parts, the BofA analyst said.
“However, as long as the additional tariffs are avoided, we think there will be a generally positive impact on U.S.-related OEM stocks,” Nihonyanagi wrote.
Toyota Up Slightly
Toyota shares were up 0.75% at $137.39 at the time of publication.
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Latest Ratings for TM
Date | Firm | Action | From | To |
---|---|---|---|---|
Sep 2019 | Downgrades | Equal-Weight | Underweight | |
Nov 2018 | Upgrades | Neutral | Overweight | |
Jun 2018 | Upgrades | Neutral | Buy |
View More Analyst Ratings for TM
View the Latest Analyst Ratings
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