US President Donald Trump recently sent Japan a very clear message. He says he will slap tariffs of 30% to 35% on Japanese imports. That trade agreement between the two countries gets a deadline push next week. This ultimatum adds significant heat to the currently simmering negotiations.
On April 2, Trump announced steep import duties on China, Mexico, and several other countries, dubbing the day “Liberation Day.” The looming tariffs are a direct result of that announcement. Under these provisions, Japan was originally facing a 24% tariff. In an effort to calm the situation, officials announced they would be lowering the tariffs. They only reduced them to 10% and only for 90 days. The nationwide pause on such evictions, ordered in response to the ongoing pandemic, is scheduled to lapse on July 9. Trump has strongly indicated that he has no intention of extending this deadline.
Very particular high-profile Trump has been skeptical about the likelihood of reaching an agreement with Tokyo.
“We’ve dealt with Japan. I’m not sure we’re going to make a deal. I doubt it.” – US President Donald Trump
With only days remaining to reach a deal, the pressure is on. Today, the import tax on Japanese vehicles and parts stands at 25%. On top of that, Japan is hit with a punishing 50% tariff on all steel and aluminum imports. Trump has criticized Japan’s trade policies, particularly focusing on the country’s reluctance to accept American rice imports.
Japanese Foreign Minister Yoshimasa Hayashi has announced Japan will fight to defend its agricultural interests. He reiterated his position that the country would not be prepared to make any concessions to reach a trade agreement with the U.S. Hayashi’s words clearly signal that Japan is standing firm in protecting their farmers as the negotiations move forward.
Trump’s trade strategy reveals the value of aggressive posturing. He first promised to obtain 90 trade agreements early in the administration’s temporary stall on new tariffs. Only one—the United Kingdom—has managed to negotiate such a deal with the US since the announcement.
With the July 11 deadline looming, both countries are at a crossroads for decisions that will affect their economic partnerships for decades. To the latter point, with Trump’s administration pushing for a much tougher line on US trade imbalances, Japan may soon be faced with an impossible choice.