Major Perception Gap Emerges in Tariff

After the second ministerial meeting over tariffs between Japan and the United States, a major perception gap emerged. While Japan side demanded to include all kinds of products in agenda of their negotiation, the U.S. side argued that they would not discuss some goods, such as cars, steel and aluminum. Although both sides explore a deal as early as possible, the negotiation is getting complicated with clash of their national interests.

Following the first meeting on April 16th, Japan’s top negotiator, Ryosei Akazawa, had the second meeting with his counterparts, U.S. Secretary of Treasury Scott Bessent, Secretary of Commerce Howard Lutnick and U.S. Trade Representative Jamieson Greer, in Washington, D.C. on May 1st. After the meeting, Akazawa announced that both sides made a detailed discussion on expansion of trade, measures of non-tariff barriers and cooperation in economic security.

 

It was when Akazawa was on his way to get back to Japan after the meeting that Japanese news media reported U.S. intention to exclude cars and some other goods from the negotiation. According to the sources, Japan demanded the U.S. to reconsider tariff policy on all the products. Nevertheless, the U.S. insisted that the negotiation was about additional “reciprocal” tariffs respectively on each country. Japan is projected to be adopted 14 percent of tariff, in addition to 10 percent common basic tariff rate. President Trump has activated 25 percent of tariff on cars in April and another 25 percent on steel and aluminum in March.

 

As soon as arriving Japan, Akazawa reported to Prime Minister Shigeru Ishiba about result of the meeting. He announcedthat cars would be indispensable for the package of agreement. “We cannot agree without those items (cars, steel and aluminum),” said Akazawa to the reporters. He added that he had no perspective for an agreement so far.

 

The bilateral negotiation continues after the second ministerial meeting by officials of both governments. The third ministerial meeting will hopefully be held in mid-May. It is recognized that the U.S. side hopes to reach a deal before 90-day moratorium of reciprocal tariffs expiring in early July. Trump seems to hope to raise currently declining his approval rate with an achievement in the tariff negotiation with Japan.

 

Considering serious views on the negotiation from voters in the Upper House election in July, Ishiba administration cannot make any easy compromise to the U.S., namely over the trade of agricultural products including rice. Some news outlet reported that the Japanese side had possibly made some concessions in corn or soybean. Farmers were careful about being sacrificed to protect car manufacturing. Protecting national interest is a common requirement of parties to Ishiba government.

 

In a monetary policy meeting on the same day of Akzawa’s meeting, the Bank of Japan revised its perspective of Japan’s economic growth in FY2025 from 1.1 percent in January to 0.5 percent in April. It is true that Japan has no time to waste.

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