FOCUS: Trump wants Japan's clout, but more needed before tariff deal

Kyodo News

6 hours ago

By Takuya Karube, KYODO NEWS - 4 hours ago - 03:05 | All, World
As widely expected, U.S. President Donald Trump held talks with Japanese Prime Minister Shigeru Ishiba in Canada, but their conversation turned out to be rather brief, indicating there is much more work to do before they can strike a deal on tariffs.
Trump and Ishiba sat down together on Monday for about half an hour on the sidelines of a Group of Seven summit, producing a mere confirmation that trade negotiations will continue following six rounds of ministerial discussions since mid-April.
In an apparent reflection of the not-so-easy situation with Japan, when asked by a reporter how his second in-person meeting with Ishiba went, Trump responded with only one word: "Well."
Later, on the way back to Washington on Air Force One, Trump said it was a "great conversation" and "I thought he was terrific, actually," referring to Ishiba. But he added that the Japanese are "tough."
With the imposition of hefty tariffs on imports, Trump has pledged to slash U.S. trade deficits and rejuvenate domestic manufacturing.
The United States imports far more than it exports, with Trump strongly believing its negative trade balance is primarily the result of the "unfair" trade practices of other countries.
In the case of Japan, Trump and senior officials of his administration have often complained that almost no American cars are sold in the country, blaming the situation on perceived market barriers such as Tokyo's safety and environmental regulations.
They have pointed to the low sales volume in Japan as a good example of American manufacturers not being on equal footing with their rivals.
Unlike Japan, which maintains a zero-tariff policy on imported passenger vehicles, the Trump administration raised the tariff rate on such vehicles by 25 percent to 27.5 percent in early April.
Among the Trump administration's barrage of higher tariffs, the sharp hike is Japan's biggest headache as the automotive industry is a powerful driver of its economy.
"Automobiles are truly a major national interest," Ishiba told reporters, suggesting that Trump's resistance to scrapping or substantially lowering the auto tariff remains a key impediment in negotiations. "We will do everything in our effort to protect this kind of national interest."
William Chou, deputy director of the Hudson Institute's Japan Chair, said that in light of recent signals from Tokyo and Washington, he sees neither side as being in a rush to make a deal.
Chou said that is partly due to their aim of gaining "negotiation leverage."
Compared with other major U.S. trading partners, Japan has far more strength in bargaining, he said, noting that it has been the largest investor in the United States in recent years, employing more than 1 million workers, and it also has an incomparable capacity to cooperate on the economic security front.
When Ishiba visited Washington in February, he pledged to Trump that Japan's direct investment, totaling about $800 billion, would be further increased to $1 trillion.
Trump has framed higher tariffs as a means to protect national security, using Section 232 of the 1962 Trade Expansion Act as a legal basis. He regards sectors such as automobiles, steel, semiconductors, critical minerals, energy and shipbuilding as top priorities.
"While other American allies may have been able to collaborate with Washington in a few of these sectors, only Japan has the technical know-how, the manufacturing capacity, the financial resources and the shared heightened concerns over economic coercion (from China) to work with the U.S. in all of these sectors," he said.
Trump has given Japan and other key trading partners a 90-day reprieve from what he calls country-specific "reciprocal" tariffs.
Last week, U.S. Treasury Secretary Scott Bessent, the point man for the tariff negotiations, said Washington could extend the pause, set to expire in early July, if its trading partners continue to negotiate "in good faith."
Wendy Cutler, a former acting deputy U.S. trade representative, said Japanese negotiators have the advantage as the administration is "under heavy pressure to produce trade deals during the 90-day truce period."
Cutler said that although reducing Japan's trade surplus is the number one priority for the administration, the scope of negotiations is broad, as objectives ranging from improving market access to boosting cooperation in critical minerals, energy and other sectors deemed strategic to national security are also in play.
Looking ahead, Cutler, who is now vice president at the Asia Society Policy Institute, and Chou of the Washington-based think tank both believe there could be bumps in bilateral relations even if the two countries manage to reach some agreement in the coming weeks.
They suggested that the areas of potential economic security cooperation could be a double-edged sword as the Trump administration may unleash more tariffs in sectors important to Japan, including semiconductors, pharmaceuticals and parts for commercial aircraft, all of which are currently subject to its investigation under Section 232.
Chou said that "another hiccup may be the lack of Japanese movement" on a liquid natural gas project in Alaska, a pillar of Trump's energy agenda.
"If there remains inaction (either by the Japanese private sector or the government), there will likely be continued frustration in the White House that may spill over," he said.
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