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NHK
11 hours ago
- Business
- NHK
Trump's trade strategies in Asia
The United States reached a trade deal with Japan. What's next for Asia, especially with US-China trade negotiations in the background? NHK World's Inoue Yuki speaks with William Chou at Hudson Institute and Mireya Solis at the Brookings Institution to get their insights.
Japan Forward
2 days ago
- Business
- Japan Forward
Trade Deal Puts Japan–US Alliance on a New Economic and Strategic Footing
Japan and the United States have finalized a sweeping new trade agreement. It aims to deepen cooperation across strategic industries, including energy infrastructure, semiconductors, pharmaceuticals, critical minerals, and shipbuilding. The deal also includes an ambitious $550 billion investment framework and expanded defense procurement on the Japanese side, marking a major step forward in the two countries' push to align economic and national security interests amid global instability. A standout feature of the deal is Japan's successful negotiation of a "safety clause" that effectively grants it most-favored-nation treatment for Section 232 tariffs. These US tariffs, imposed on national security grounds, have been applied to key sectors, including steel, and are expected to target high-tech goods such as semiconductors and pharmaceuticals soon. According to William Chou, deputy director of the Hudson Institute, the clause represents a "significant development." In his response to an interview request from JAPAN Forward, Chou said the deal could secure Japan's competitive edge in sensitive industries. "It ensures Japan will always pay the lowest negotiated rate on (these) tariffs," Chou explained. That, he emphasized, is a big deal for industries like semiconductors and pharma, where even marginal cost differences affect global competitiveness. However, it remains unclear whether this clause will apply to future Section 232 actions, something both governments have yet to clarify. "This is worth clarifying," Chou said, cautioning that the scope and longevity of the clause may determine its strategic value. Another key component of the agreement is a massive $550 billion bilateral investment framework aimed at mobilizing public and private capital into critical infrastructure and industry projects in the US. But the mechanism behind the fund remains murky. "We don't have details on how it'll be operated and the timescale," Chou noted. "[US Commerce Secretary Howard] Lutnick has said that the US will decide on the projects. [Minister in Charge of Economic Revitalization Ryosei] Akazawa said NEXI [Nippon Export and Investment Insurance] and JBIC [Japan Bank for International Cooperation] will review the projects. So that still has to be worked out before we gauge feasibility." Minister Ryosei Akazawa leaves the meeting with Commerce Secretary Robert Lutnick on June 27 in Washington. (©Kyodo) A White House fact sheet highlighted projects in semiconductors, pharmaceuticals, critical minerals, and shipbuilding, all areas that align with Japan's industrial strengths and previous offers of cooperation made during negotiations. Still, the timing of the agreement has sparked political backlash in Tokyo. Prime Minister Shigeru Ishiba is facing mounting pressure from within the Liberal Democratic Party, which is reeling after losing its upper house majority. Opposition parties have seized on the lack of detail to question the government's transparency and competence. "The opposition parties are using the lack of details of the $550 billion investment fund as a way to criticize Ishiba," Chou explained. While these kinds of investment frameworks typically take time to design, that nuance doesn't always land in political messaging, he suggested. Chou also pointed to two major investment announcements, SoftBank's $100 billion commitment to the US tech sector and Nippon Steel's $26 billion expansion, as evidence of Japan's serious engagement with American industrial revitalization. However, he noted that the Japanese side missed an opportunity to highlight these moves more aggressively during negotiations. "It was surprising that Japan didn't publicize these investments more to demonstrate its FDI (foreign direct investment) leadership in the US," he said. Chou added that even if they don't end up being part of the $550 billion fund, they send a strong signal. The deal also expands Japan's military purchases from the US, with annual defense imports increasing from $14 billion to $17 billion. Although not explicitly linked to the trade agreement, the increase is seen as part of the broader trend toward integrating economic and military policy. "Now that the trade deal is done, it will be interesting to see how this might affect future dialogue regarding Japanese defense spending," Chou said. Beyond the bilateral context, Chou believes the agreement serves as a template for future US trade strategy. In particular, it may preview how Washington will approach trade relationships with partners such as the European Union and South Korea, especially those with significant trade surpluses with the US. "This Japan deal is a model," Chou argued. He tied this approach directly to broader strategic goals: "The Trump administration's aim is to collaborate with allies on greater American industrial production, economic security/supply chains, and dominance in both tech and energy." In that sense, the agreement is not just another trade deal. It is a redefinition of the economic architecture underpinning the Japan-US alliance, and perhaps a preview of how America will do business with the world in a new era of great power competition. The alignment also underscores what Chou describes as the "deep, layered, and self-reinforcing" nature of the Japan-US alliance. "Despite occasional differences, our 75-year-old alliance is more important than ever," he said. Author: Daniel Manning
Japan Times
16-06-2025
- Business
- Japan Times
Japan and the U.S. face challenges in economic security discussions
Economic security has been an ever-present element in trade talks between Japan and the United States, and an area of broad agreement between the two countries. They both want to work toward ensuring a steady supply of critical materials, and cooperation is seen as a way to achieve that. Beyond the basics, not much progress seems to have been made. Details remain scarce despite frequent references to the theme of economic security by Japanese and U.S. negotiators. Observers say that any initiatives will take years to materialize. Importantly, they note, an agreement on economic security does little to get Japan what it really wants, which is a full removal of the heavy duties imposed by Washington since March. 'It will take time, but I think this is the part where there's the least disagreement,' said William Chou, deputy director of the Japan Chair at Hudson Institute. 'It's just a question of how quickly we can move together to find a good solution in cooperation from both sides.' To a great extent, economic security is about rare earths and about China's dominance of the mining and processing of them. Japan imported nearly 60% of its rare earth materials from China in 2022, down from over 80% in 2009. When it comes to heavy rare earths crucial to the manufacturing of defense equipment and electric vehicles, the reliance remains 100%, according to economy ministry data . Japanese negotiators are careful not to single out any country or any specific material in discussing economic security, preferring to limit what they say to general comments about building resilient supply chains. Informed observers argue that the target and the concerns are obvious. 'I think the trade talks — at least when it talks about economic security — have been with China very much in the foreground,' said Chou. In 2012, researchers discovered a vast trove of mud rich in rare earths 6 kilometers underwater in Japan's exclusive economic zone off of the Ogasawara Islands. But the technology needed to tap the resources is still under development. 'So, ultimately, the dependence on China doesn't change much. That's why we have to develop mining and processing capabilities outside of China,' said Kazuto Suzuki, a director at the Institute of Geoeconomics and a professor at the University of Tokyo. Efforts have been well underway since the 2010s, with Sojitz Corp. and Japan Oil, Gas and Metals National Corp. making several investments in heavy rare earth production projects in Australia. In 2023, the two companies signed a supply agreement with Lynas Rare Earths, under which they will receive up to 65% of the heavy rare earths — dysprosium and terbium — produced from the Mount Weld mine in Western Australia. This output will cover an estimated 30% of Japan's domestic demand. The United States is adapting a different approach, and one that might not bode well for cooperation with Japan. 'Basically, the U.S.'s current economic security policy is very self-centered — it assumes the U.S. can handle all production on its own. But in reality, it can't. Yet it continues to impose tariffs, trying to create a self-contained supply chain within the U.S.,' Suzuki said. 'This is no longer about U.S.-Japan cooperation. The U.S. is not seeking partnership — it's aiming for 100% self-reliance in its supply chains. That leaves very little room for collaboration.' 'There's a huge disconnect between what the U.S. is demanding and the actual reality, so there are a lot of problems — honestly, too many,' Suzuki added. Last Wednesday, China and the United States reached a framework trade deal in London. The deal restores U.S. access to China's rare earths, which had been suspended due to growing trade friction. Chou listed five ways in which Japan can contribute to solving the broader supply-chain problems: investment in U.S.-based mining and processing projects via Japanese trading houses; partnerships with third countries to diversify the supply chain; offering processing capacity in Japan; acting as a 'canary in the coal mine' to signal China's economic coercion; and exploring deep-sea mining as a future area of cooperation. 'I do think that the Trump administration does have a larger economic strategy where tariffs, economic security, foreign investment and technological innovation all are playing, are all interacting with each other,' Chou said. 'It's not just about tariffs.'
