Japan's automobile production will decrease by 4.3 percent annually over declining U.S. sales while overall industrial production could drop by 0.6 percent due to the U.S. expanded tariffs, the Japan Research Institute predicted.

Shumpei Goto, a researcher at the institute, noted that with tariffs raising car prices in the United States, Japan-made car sales are expected to decline, leading to reduced vehicle production and a ripple effect on auto parts manufacturers, Nikkei reported Thursday.

The U.S. government is set to begin collecting the new tariffs next week, with key automotive components such as engines also included in the scope of the new tariffs.

As Goto's initial analysis did not account for the additional tax burden on parts, taxation on both finished vehicles and parts is likely to further reduce production, according to the report.

In 2024, Japan's automobile exports to the U.S. totaled 6.0261 trillion yen (about 40 billion U.S. dollars), making up 28.3 percent of Japan's total exports to the country.

According to the Japan Automobile Manufacturers Association, approximately 1.37 million vehicles were exported to the U.S. in 2024.

Japanese Prime Minister Shigeru Ishiba said Thursday that Japan will consider an appropriate response against U.S. tariffs on imported automobiles, vowing that all options are on the table.

"We are strongly urging the U.S. not to apply the (additional) 25-percent tariff to Japan," Ishiba said.