Akazawa returns to U.S. for more talks as tariff deal looks shaky

Japan Times

3 days ago

A trade deal reached by Japan and the United States after months of talks has turned out to be exceedingly fragile, as it emerged that the two countries view the handshake agreement very differently .
The lack of formal documentation and slow implementation by the United States of a key tariff concession have left open the possibility that there's not much of deal to begin with .
'The recent Japan-U.S. agreement regarding U.S. tariff measures does not constitute a legally binding international commitment,' economy and fiscal policy minister Ryosei Akazawa told a Lower House budget committee hearing on Monday.
Akazawa, Japan's chief negotiator in talks with the United States who shook hands with U.S. President Donald Trump to signal the agreement, departed Tokyo again on Tuesday evening for a four-day trip to Washington.
Just two weeks after his triumphant mission-accomplished moment, Akazawa is back in the U.S. for a ninth round of talks.
Under the terms of the July 22 deal, the U.S. will impose a 15% 'reciprocal' tariff on most Japanese goods — up from the current 10% but lower than the 25% Washington threatened to impose. Implementation of this portion has been set for Thursday .
Also agreed upon was that Trump's tariffs on automobiles were to be cut in half from 25%, with the new total being 15% when a 2.5% levy independent of the Trump tariffs is included.
The White House put out a fact sheet soon after the two sides reached the agreement, and the Japanese government issued a four-page powerpoint slide with an outline of the agreement.
Among the discrepancies found between the two documents was the implementation of a $550 billion investment pledged by Japan. The U.S. president said Japan will invest at least that amount and at his direction, and that the United States would keep 90% of the profits.
Japan said all it had agreed to was to provide loans, loan guarantees and equity investment up to that total through financial institutions backed by the government, and that direct equity investment will be just 1%-2% of the $550 billion.
Japanese officials, including Akazawa and Prime Minister Shigeru Ishiba, have repeatedly said there's no plan to issue a joint statement with the United States of any sort.
'There are pros and cons of drafting an agreement document. And because the cons outweigh the pros and it would not serve Japan's national interest, the decision was made not to issue a formal agreement document,' Ishiba told the Lower House on Monday.
He said the government will consider releasing more details of the agreement in the coming days.
Japan views auto exports as vital to its economy and wants the U.S. to cut the tariff on cars as soon as possible. |
Reuters
The United Kingdom has a written agreement with the U.S. outlining its trade deal as negotiated with the Trump administration, but the European Union and South Korea do not. In its fact sheet, the EU noted in a bold font that the deal it reached with the U.S. is 'not legally binding.'
Richard Katz, an economist and author of 'The Contest for Japan's Economic Future,' said Japan is likely hoping that 'if we don't put the agreement in writing, we don't have to fulfill Trump's demands.
'It can evade the promises Trump may think Japan made — or that Trump is just making up now — all while insisting that Japan is fulfilling its part of the bargain.'
The Trump administration has yet to issue a direct order to lower the levies on Japanese vehicles.
Auto manufacturing is seen by Japan as a business at the core of its economic interests, and its insistence that the United States lower the rate or eliminate the new duty altogether on cars became a major sticking point during negotiations.
U.S. Treasury Secretary Scott Bessent has warned that tariff rates could "boomerang" back to 25% if Trump is 'unhappy' with the implementation of the deal — specifically the $550 billion of investment by Japan into the U.S.
One thing that the two sides do have mutual understanding on, according to Akazawa, is the need to ensure the other side lives up to its commitments.
'We have been asking the U.S. to sign the necessary presidential order to lower tariffs on automobiles as soon as possible, and the U.S. side also wants to move forward while reaffirming a shared understanding of the agreement,' Akazawa told an Upper House meeting before his departure.
'We will press for the prompt issuance of a presidential order on auto and auto parts tariffs, even if it's just a day sooner,' he added.
"What we are asking for is very simple — just for the president to issue an executive order setting automobile tariffs at 15%,' Akazawa said in Tokyo just before leaving for the airport on Tuesday. 'It's not that there are complicated negotiations or tactics involved.'