GENEVA, Switzerland: Japan's car industry is facing a multibillion-dollar blow as sweeping U.S. auto tariffs threaten its largest export market, a United Nations trade agency has warned.

The International Trade Centre (ITC) said this week that Japan could lose as much as US$17 billion in vehicle export potential to the U.S. following President Donald Trump's move to impose a 25 percent tariff on foreign cars and trucks.

"Japan's automotive sector accounts for approximately 20 percent of the country's total exports, with the majority of these exports destined for the U.S. market. Now, the flat 25 percent tariff on the sector that came into force yesterday means that Japan could lose $17 billion in export potential in the U.S., according to our calculations," said Julia Spies, ITC chief of trade and market intelligence, speaking in Geneva.

The White House confirmed this week that the global 25 percent duties on vehicles took effect as scheduled, with additional tariffs on imported auto parts that began on May 3. Together, the tariffs impact more than $460 billion in imports annually, according to Reuters estimates.

Countries most exposed to the U.S. automotive market—such as Japan, Slovakia, and Honduras—are expected to bear the brunt of the disruption, according to the ITC. Nearly half of all cars sold in the U.S. last year were imported, making it the world's largest vehicle importer.

The ITC suggested Japan may now need to rethink its trade strategy and explore alternative markets for its auto exports.

"Markets such as China, Germany, the Philippines, and Thailand together hold unrealised export potential for Japanese vehicles that matches the estimated loss in the U.S. market," said Spies.

Meanwhile, the fallout is expected to hit U.S. consumers as well. A report from the Anderson Economic Group estimated that Americans could face over $30 billion in added costs and reduced car sales within the first year of the tariffs taking full effect.

The ITC, a joint initiative of the United Nations and the World Trade Organization, supports the development and transition of economies through trade development and export promotion.