(Dec 12): Japan’s car industry union will seek a slightly more ambitious wage hike goal in the upcoming round of negotiations compared to the previous year, adding momentum to talks as the Bank of Japan (BOJ) tracks pay trends in the US tariffs-hit sector.
The Confederation of Japan Automobile Workers’ Union (JAW) will aim for a minimum ¥12,000 monthly base wage increase, according to a draft plan for negotiations culminating in March released on Friday. Under a target that sought a ¥12,000 raise instead of seeking that level as a minimum, the union secured a ¥9,520 increase this year, amounting to a 3.58% gain.
Toyota Motor Corp, Nissan Motor Co and Honda Motor Co are among the members of the group. The goal will be formally approved after the group’s board meeting in January.
JAW’s goal, which would exceed this year’s outcome, suggests that workers plan to keep pressure on employers even as the sector struggles with higher US levies. That provides further impetus for the BOJ to increase borrowing costs.
“The auto industry is waging a battle to stay competitive globally while being affected by tariff policies around the world,” Akihiro Kaneko, president of JAW, told reporters on Friday. “Even under tough conditions, the reality is that we still have to keep working on securing labour and helping workers grow,” he said, emphasising the need for continued wage hikes.
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Markets have largely priced in a Dec 19 rate hike, after governor Kazuo Ueda signalled last week that a move is coming soon. All 50 economists surveyed by Bloomberg expect action next Friday.
Earnings and wage developments at automakers remain a key concern for both the central bank and the government, given the broader sector employs nearly 10% of Japan’s workforce and has been among the hardest hit by President Donald Trump’s tariff campaign. Ueda said that he’s paying particular attention to carmakers’ wage performance after the bank kept rates at 0.5% at its October meeting.
In July, Washington agreed to set tariffs on Japanese auto exports to the US at 15%. While that’s lower than the 25% initially threatened, the rate remains far above pre-Trump levels, weighing on the nation’s key exporters. The heightened uncertainty during the prolonged trade negotiations also prompted automakers to take a more cautious stance.
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Japanese carmakers cut their North American selling prices for vehicles by nearly 20% earlier this year to retain competitiveness as tariffs added to costs, the BOJ’s corporate goods price report showed. The impact of the tariffs on seven major automakers is expected to reach ¥2.5 trillion in total in the fiscal year ending in March, according to their earnings reports.
On the other hand, the industry continues to benefit from a weak yen. While the currency is trading around the same level as a year ago, it remains far weaker than assumptions built into corporate forecasts. Toyota, for example, assumes a rate of ¥146 per dollar for the current fiscal year, compared with the yen’s current level of around ¥155.
Automakers typically announce their wage offers in February, setting the tone for the broader negotiations.
JAW’s wage target follows similarly solid calls from other unions, including national umbrella group Rengo. The nation’s biggest labour union federation last month confirmed that it will seek at least 5% pay growth in the upcoming talks, maintaining the target from the previous round.
“Companies are facing a situation where they can’t secure workers if they worsen labour conditions,” JAW’s Kaneko said. “As a union, we want to do what we can while being aware of our industry’s environment.”
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