Background on the Trade Dispute
The United States, under President Donald Trump, has imposed a 10% basic tariff on most countries and higher tariffs on automobiles, steel, and aluminum. Japan, a key U.S. ally and major investor, is particularly affected by these tariffs.
In April, Trump announced an additional “reciprocal” tariff of 24% on Japan, which he later postponed until early July, similar to actions taken against other countries.
Japan’s Negotiation Efforts
Japan aims to have all announced tariffs by Trump removed. During the fifth round of talks, Ryosei Akazawa, Tokyo’s trade envoy, stated to Japanese reporters in Washington that they made “more progress towards an agreement.” However, he also emphasized that “no agreement has been reached yet.”
Akazawa expressed hope for an agreement “as soon as possible,” but negotiations may continue until June 15, when the G7 summit begins. Japan and the U.S., along with Germany, Canada, France, Italy, and the United Kingdom, are members of the G7.
Prime Minister Shigeru Ishiba and Trump plan to hold bilateral negotiations on the sidelines of the G7 meeting in Canada, according to reports.
Impact on Japan’s Economy
The 25% tariffs imposed by Washington on Japanese automobiles are especially painful for Tokyo, as nearly 8% of all jobs in Japan are linked to the automotive sector.
Japan’s economy, the fourth largest in the world, contracted by 0.2% in Q1 of 2025, increasing pressure on the unpopular Ishiba ahead of the July upper house elections.
Key Questions and Answers
- What are the current tariffs imposed by the U.S. on Japan? The U.S. has implemented a 10% basic tariff on most countries and higher tariffs (25%) on automobiles, steel, and aluminum from Japan.
- What is Japan’s objective in these negotiations? Japan seeks the removal of all tariffs announced by Trump.
- What is the significance of the automotive sector in Japan? Approximately 8% of all jobs in Japan are connected to the automotive industry, making the 25% tariffs particularly challenging.
- How does the current economic situation in Japan affect the ongoing negotiations? With Japan’s Q1 2025 GDP contracting by 0.2%, the pressure is on Prime Minister Shigeru Ishiba ahead of the July upper house elections.
