Japan vows to seek U.S. auto tariff concessions in trade talks

 

Japan has firmly stated it will not agree to a new trade deal with the United States unless it includes concessions on automobile tariffs. Ryosei Akazawa, the country’s top trade negotiator, emphasized that shielding Japan’s vital car industry is non-negotiable. His remarks came after US President Donald Trump announced that goods from Japan would face 25% tariffs starting August 1. Akazawa held a 40-minute call with US Commerce Secretary Howard Lutnick, where they agreed to keep negotiations active. He explained that the two sides are working toward a broad economic package covering trade expansion, non-tariff barriers, and security cooperation. Trump has signaled openness to delaying the tariff enforcement if nations propose acceptable countermeasures. However, Japan is not racing against the August 1 timeline and insists it won’t compromise its agricultural sector for a quick deal. Akazawa made it clear: without an agreement on auto tariffs, any deal would be pointless. The announcement caused market ripples, with the dollar climbing to a two-week high against the yen. Market experts believe that the uncertainty surrounding trade and tariffs might mute Japan’s central bank’s tone in its upcoming July 31 policy report, dampening expectations for any interest rate hike this year.

Japan missed securing a deal with the US before the expiration of Trump's temporary tariff freeze on July 9. That lapse has heightened concerns about Japan's economic and political stability. With an upper house election scheduled for July 20, Prime Minister Shigeru Ishiba has vowed not to make easy concessions, especially under political scrutiny. Media polls suggest Ishiba’s ruling coalition might lose its majority, complicating Japan’s negotiating stance. Adding to Japan’s challenges is the economy's recent contraction. It shrank in the first quarter of the year, and experts warn that Trump’s tariffs could push it into a recession. Economist Yoshiki Shinke from Dai-ichi Life Research Institute estimates that the 25% tariffs alone could shave 0.7 percentage points off Japan’s annual GDP growth. In the face of these risks, Finance Minister Katsunobu Kato stated that Japan currently has no plans to open discussions with the US on currency matters, signaling Tokyo’s reluctance to broaden the negotiation scope. Overall, the US-Japan trade dispute is unfolding amid high economic and political stakes. Japan seeks to protect its automotive lifeline without compromising on domestic interests like agriculture, while facing increasing global and domestic pressures. If a resolution is not found soon, the fallout could hurt both economies and further shake investor confidence in the region.

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