Thailand-Japan free-trade agreement, but will cars get cheaper?

This evening, Prime Minister Shinzo Abe and Surayud Chulanont are signing a free-trade agreement to lift more than 90% of the trade tariffs between Japan and Thailand.

Under the agreement Thailand will phase out its surcharges on Japan's iron and steel products over a 10 year period.

Of primary interest to us is that it will also lead to a reduction in levies on Japanese cars with engines of 3 liters or more. The reduction will take four years, ending at 60 percent, down from the current level of 80 percent! This reduction could help increase imports of large Japanese cars, such as high-end Lexus models. But 60% is still a lot of "tax", and these vehicles will still be overpriced here, relative to global pricing.

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