Tariff Tensions Rise as Trump Personally Enters Negotiations with Japan

• President Trump unexpectedly joined US-Japan tariff negotiations on April 16.
• Trump added defense cost-sharing demands to the existing trade/investment agenda.
• Key US tariffs (10% general, 25% auto) remain a major concern for Japan.

April 16 saw President Trump join face-to-face tariff negotiations with Japanese officials, marking his direct involvement in discussions that were initially considered preliminary by Tokyo. The talks, attended by Japanese Economic Revitalization Minister Ryosei Akazawa, focused on trade and investment issues, but Trump expanded the agenda to include defense cost-sharing. 

While foreign exchange issues were excluded, tariffs on Japanese goods, including automobiles and rice, remained a concern. Trump has paused some tariffs for 90 days, but a universal 10% rate and a 25% duty on automobiles are still in effect.

How Are US Tariffs Affecting Japan’s Economy?

The imposition of US tariffs has had a notable impact on Japan’s economy. Last month, Japan’s exports increased for the sixth consecutive month, rising 3.9% year-on-year, although this was below expectations and slower than February’s 11.4% growth. The boost was partly due to companies accelerating shipments ahead of the mentioned tariffs. Exports to the US, Japan’s top market, grew 3.1%, helped by electronics/pharma.

Japan seeks the removal of additional tariffs, especially given that the automobile industry makes up 28% of its US exports.

What Does Each Side Want?

Prime Minister Shigeru Ishiba has expressed his commitment to resolving the trade contention, emphasizing Japan’s big investments in the United States and its contributions to US job creation. Despite these efforts, the US administration remains focused on addressing the $68.5 billion trade deficit with Japan and pressing allies on military cost-sharing. 

Some analysts think the push for quick deals might mean less detailed agreements, especially if the US demands changes to Japan’s agriculture or auto rules.

The ongoing trade tensions have led to mixed performances in global stock markets. For instance, European markets opened lower, while US futures saw gains. On the other hand, Japan’s Nikkei 225 index rose 1.4% following positive rhetoric from trade talks between the two countries.

US President Donald Trump’s unexpected involvement in trade negotiations with Japan marks a significant development in the ongoing tariff dispute. Initial talks have been described as constructive, and Trump himself wrote on his social media, calling the meeting “big progress” – though there’s no actual indication what that progress is.