Trade deal policy inconsistencies: Japanese Prime Minister Shigeru Ishiba has expressed concerns over the inconsistency between a 2019 trade deal with the US and President Donald Trump’s latest automobile tariffs. Despite the concerns, Ishiba stated that Japan has no plan to terminate the trade deal.
Background of the Trade Deal
The trade deal between Japan and the US was signed in 2019, during Trump’s first term as president. The agreement cut tariffs on US farm goods, Japanese machine tools, and other products, while also staving off the threat of higher US car duties. However, the agreement did not cover automobile trade.
Assurances from Trump
At the time of the agreement, then Japanese Prime Minister Shinzo Abe said he had received assurances from Trump that the US would not impose “Section 232” national security tariffs on Japanese car imports. Abe stated that between Trump and himself, it had been “firmly confirmed that no further, additional tariffs will be imposed.”
Latest US Tariffs
Despite these assurances, Japan was not exempted from Trump’s latest 25% tariff on all automobile imports in the US. Ishiba expressed Japan’s “grave concern” over the consistency of the latest US automobile tariffs with the 2019 bilateral trade deal.
Still on Trade deal policy inconsistencies
Japan’s Response
Ishiba stated that Japan will continue to convey its stance to the US, although it has no plan to terminate the 2019 agreement altogether. Japan’s top trade negotiator, Ryosei Akazawa, recently visited Washington to kick off bilateral trade talks with the US, which will likely include discussions on non-tariff barriers and exchange rates.
Upcoming Meetings
Finance Minister Katsunobu Kato is also expected to visit Washington later this week to meet with US Treasury Secretary Scott Bessent for discussions on currency rates. The meetings come amid simmering market speculation that Japan could face US pressure to prop up the yen and help reduce the huge US trade deficit.
Market Impact
The dollar recently hit a seven-month low of 140.615 yen, amid market concerns over the potential impact of the trade tensions on the currency market. Trump has imposed significant tariffs on Japanese exports to the US, including a 24% tariff on some Japanese products, although most of these levies have been paused until early July. A 10% universal rate remains in place, as does a 25% duty on cars, a mainstay of Japan’s export-heavy economy.
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