Japan will continue trade talks with US for mutually beneficial deal, Ishiba says
Securing tariff concessions for Japan’s vital automobile industry is essential to any trade deal with the US, according to the nation’s top negotiator
[TOKYO] Japanese Prime Minister Shigeru Ishiba said on Tuesday (Jul 8) that he would continue negotiations with the US to seek a mutually beneficial trade deal, after President Donald Trump announced 25 per cent tariffs on goods from Japan starting Aug 1.
Trump on Monday began notifying trade partners of steep US tariff hikes, but later indicated a willingness to delay implementation if countries made acceptable proposals. He also signed an executive order to put off the tariffs until Aug 1.
While Tokyo and Washington have yet to reach a deal, Ishiba noted that recent talks had helped Japan avoid even steeper tariffs of around 30 to 35 per cent.
“We have received a proposal from the US to swiftly proceed with negotiations towards the newly set Aug1 deadline, and that depending on Japan’s response, the content of the letter could be revised,” Ishiba said at a meeting with Cabinet ministers to discuss Japan’s strategy on tariffs.
Japan will “actively seek the chance of an agreement that benefits both countries, while protecting Japan’s national interest,” he added.
Meanwhile, top trade negotiator Ryosei Akazawa on Tuesday said that the trade deal with the US must include tariff concessions for its vital automobile industry.
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Akazawa said he held a 40-minute phone talk with US Commerce Secretary Howard Lutnick, where the two sides agreed to “actively” continue negotiations.
“We are trying to agree on a package of measures” ranging from expanded trade, non-tariff barriers and cooperation on key economic security issues, Akazawa said at a news conference.
“The two countries must garner trust through sincere dialogue, and reach common ground step by step. Through such a process, my job as negotiator is to agree on a full package as soon as possible.”
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Akazawa said Japan had no deadline in mind, including Aug 1, in reaching a deal with the US, and would not sacrifice Japan’s agriculture sector for the sake of an early agreement.
He also stressed that protecting the automobile sector, a mainstay of Japan’s export-reliant economy that is being slapped with 25 per cent tariffs, was among his top priorities.
“There’s no point striking a deal with the US without an agreement on automobile tariffs,” Akazawa said.
Uncertainty on tariffs sent the US dollar to a two-week high of 146.44 yen on fading expectations of a hawkish quarterly report from the Bank of Japan on Jul 31, which would have laid the groundwork for an interest rate hike this year.
“If the new deadline is set on Aug 1, the BOJ probably won’t be able to say much at the upcoming report in July,” said Takeshi Ishida, a strategist at Kansai Mirai Bank. “Market expectations of a near-term rate hike will be rolled back.”
In a press conference on Tuesday, Finance Minister Katsunobu Kato said he had no plans for now to hold talks on exchange rate matters with US Treasury Secretary Scott Bessent.
Economic impact
Japan failed to clinch a deal with the US before the Jul 9 expiration of Trump’s temporary pause on his “reciprocal” tariffs, after it focused on eliminating automobile levies.
With an upper house election on Jul 20, Ishiba has said Japan will not make “easy concessions” for the sake of an early deal with Washington.
Recent media polls have shown Ishiba’s ruling coalition may fail to maintain a majority in the upper house, which could complicate trade negotiations, analysts say.
US tariffs also add to woes for Japan’s economy, which shrank in the first quarter.
“There’s now a chance Japan could slide into recession,” said Yoshiki Shinke, an economist at Dai-ichi Life Research Institute, who expects 25 per cent tariffs to knock 0.7 per cent point off Japan’s annual economic growth. REUTERS
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