Japanese carmakers have largely absorbed the cost of US President Donald Trump’s tariffs on auto imports, a move that may undermine the Asian nation’s negotiating power ahead of a July 9 deadline that will see duties rocket even higher.

He said Japan could face a tariff of 30 to 35 percent if no deal is made, higher than the 24 percent reciprocal tariff Trump had originally imposed, and then paused, in early April. The tariff pause ends on July 9, though Trump has touted flexibility on the deadline.

Business sentiment among large Japanese manufacturers has improved slightly, according to a survey by Japan’s central bank, despite persisting worries over President Donald Trump’s tariffs