In surprising and dramatic developments, the United States and Japan are today deep into a notable round of USPJ trade negotiations. Personal conflict between US legislators, surprise political challengers and high-stakes political poker over dwindling key resources are all making the discussions more challenging. This week, though, there was major drama behind the scenes during those negotiations to cement a strategic alliance to counter China’s dominance of rare earth elements. Discussions directed by big names such as Elon Musk, Howard Lutnick, and Jamieson Greer were especially fiery.
On the eve of a crucial negotiation session, Lutnick, Greer, and Bessent unexpectedly at the last minute suspended their talks. They broke out into a contentious floor fight, producing an electronic hallucinatory episode for the Japanese delegation. This internal discord showcased the clashing opinion and strategy among the US team, making the already convoluted negotiations even more precarious. Jamieson Greer, US Trade Representative Jamieson Greer is best known for pushing for more reciprocal frameworks and focusing on economic security in trade agreements.
On Thursday evening Musk did an abrupt U-turn on X. This change occurred after a full day of last minute, high-stakes deal making. Yet as hostilities increased, his position began to waver. All of this changed after former President Donald Trump threatened to withhold federal funding from Musk’s companies for his opposition to the Build Back Better plan. Musk’s political maneuvering complicated the negotiations. To say that his answers were a mix of cocky bravado and savvy long-game play would be an understatement.
Musk responded with a saber rattling threat. He even hinted that he would end the only US spacecraft currently operational that can get American astronauts to the International Space Station (ISS). This call to action underscored just how high the stakes were. It painted a clearer picture of Musk’s willingness to deploy his corporate might when under political pressure. He called for the establishment of a centrist third political party in order to serve “the 80% who are trapped in the middle.” This proposal puts a surprising and radical spin on his public comments.
Things got pretty hot when Musk made a cryptic suggestion that he might favor impeachment of Trump. His insinuation tossed a figurative hand grenade of innuendo, rattling political and business elites. This maneuver prompted Japan’s delegation to seek policy clarity amid what appeared to be political improv from the US team. The Japanese negotiators’ goals The Japanese representatives focused their efforts on securing specific commitments on limiting damaging trade policies— all while threading the needle of American internal political maneuvering.
As the text-based negotiations progressed, an indication that Japan was adjusting its stance became clear. Japan had been looking to make the agreement much more extensive by seeking a full elimination of the 25% US auto tariffs. Now, they’ve turned their eyes towards advocating for a phased reductions plan instead. This shift represents Japan’s acknowledgement of the increasingly difficult balancing act that will be needed to continue to cultivate positive bilateral relations while meeting important domestic economic priorities.
TAA involving negotiations, but not limited to trade. Beyond their everyday infrastructure benefits, they are the most important geopolitical chess move that aims to permanently align Washington and Tokyo long-term. The US’s multi-channel, consensus-seeking approach would stand in stark contrast to China’s hierarchical negotiation model, made for single-channel clarity. Today’s conversations about the supply chain are complicated, and that’s because global trade is complicated. We need to work together as a matter of utmost urgency to prevent China from monopolizing the world’s critical mineral exports.
More than any other person or entity, Musk hath wrought chaos in the market. Until the past few trading sessions, when they were responsible for an estimated $150 billion of shareholder value lost. His reach is not just in high technology and space exploration, instead it filters through our capital markets and enters into our economic policy debate.
With negotiations still underway, on the legislative front both sides have a lot to gain by continuing to play the juggling act. The Japanese delegation, according to this article, requires firm guarantees before Tokyo commits to bilateral joint ventures on rare earths. At the same time, the American team faces infighting and constant distractions from corporate interest. We know from past experience that these discussions will determine our trade policies for years to come. What’s more, they will shape the larger geopolitical environment.