Japan Becomes Fourth Asian Nation to Reach U.S. Trade Deal
On the 22nd (local time), Japan reached a trade agreement with the Trump administration in the United States. This is the fourth Asian country to do so and the first among major trading partners of the U.S. President Donald Trump posted on Truth Social that day, stating, “I just completed a massive agreement with Japan,” adding that it may be the largest agreement in history.
Japan Agrees to $550 Billion U.S. Investment, Tariff Cuts
According to him, Japan will invest $550 billion (about 759 trillion 825 billion won) in the United States in accordance with the agreement. President Trump stated, “The agreement will create hundreds of thousands of jobs.” He continued, “Japan will open up its market for cars, trucks, rice, and certain agricultural products.” The tariff rate for Japan under the agreement is reduced from the existing 25% to 15%, a decrease of 10 percentage points. President Trump said, “This is a very exciting time for the United States,” adding, “We will maintain a very good relationship with Japan. Thank you for your interest in this issue.”
Trump Highlights LNG Joint Venture and Tariff Gains
At the subsequent Republican dinner, he stated that “(with Japan) we will complete another agreement,” adding that “Japan is forming a joint venture with us regarding liquefied natural gas (LNG) in Alaska.” President Trump reiterated, “We are now fully prepared to finalize the agreement,” and emphasized, “We will enter into an agreement with Japan regarding LNG.” He described the agreement as “an excellent agreement for everyone,” asserting, “We are doing very well as a nation. We are strong, and we are collecting a lot of money through tariffs.” Since the announcement of mutual tariffs by President Trump last April, the U.S. has engaged in trade negotiations with countries such as the UK, Vietnam, Indonesia, and the Philippines. However, the significance of this agreement is profound, considering that Japan is one of the top five trading partners of the U.S. by size.
Japan Deal Seen as Milestone Among Top U.S. Trade Partners
Initially, as of August 1st, the outlook regarding the trade agreement between the United States and Japan was largely negative. It was reported that both sides were deadlocked over issues including rice sales and tariffs on automobile-related items, which are crucial to Japan’s economy. President Trump criticized Japan last month, stating, “Japan experiences a huge rice shortage but does not import our rice.” He also claimed, “Japan sells us millions of cars, but we do not import their cars.”
Early Negotiations Were Stalled Over Rice and Auto Tariffs
Furthermore, on the 20th, the ruling Liberal Democratic Party lost in the Japanese House of Councillors election, making the prospects for negotiations even gloomier. With the loss of domestic policy momentum, their room for maneuver in negotiations could be restricted, and they risk not being treated as a worthy negotiating partner by the U.S. In relation to this, before the announcement on that day, Japan’s Minister of Economic Revival, Akazawa Ryosei, visited the U.S. the day before for ministerial-level negotiations. It is reported that he embarked on the trip without finalizing any schedule with the negotiating counterpart.
Japan’s Political Setback Complicates Trade Talks With U.S.
This was seen as Prime Minister Shigeru Ishiba’s intention to complete the trade negotiations with the U.S., expressing his willingness to remain in office. He stated that the agreement was the “result of negotiations that involve national interests,” and hinted at a future phone call or meeting with President Trump.Although President Trump announced the conclusion of the negotiations on that day, the details of the agreement have not yet been disclosed. Prime Minister Ishiba has indicated that he will decide on his position after thoroughly reviewing the contents of the agreement.
Ishiba Pushes Deal to Secure Position Amid Uncertainty
However, regarding the rice market opening that President Trump claimed, Prime Minister Ishiba stated, “This agreement does not include sacrificing agriculture at all.” He further clarified that “lowering tariffs on agricultural products and other items on the Japanese side is not included in the agreement.”
Details of Trade Agreement Remain Undisclosed Post-Announcement
He explained that, within the existing “minimum access” system, necessary rice procurement will be secured while considering the national supply situation. This is interpreted as a good agreement to increase the import share of U.S. rice.According to NHK, the tariff on automobiles will be reduced to 12.5%, which is half of the existing 25%. NHK cited Japanese officials, stating that if the existing 2.5% tariff imposed by the U.S. is added, the tariff on Japanese cars will become 15%.It is reported that there will be no changes to the current 50% tariff on steel and aluminum.On that day, Japan’s Minister of Economy, Trade and Industry, Hiroshi Kajiyama, posted on social media, saying “The mission has been accomplished.”
Ishiba Denies Agricultural Concessions in U.S. Trade Deal
On the other hand, the trade agreement between the United States and Japan is expected to serve as a reference for the Korea-U.S. trade negotiations. Ahead of the expiration of the mutual tariff suspension deadline on August 1, our government plans for the National Security Chief Woori Seongrak, along with the ministers of economy, diplomacy, and industry, as well as trade officials, to visit the United States this week.
NHK Reports Auto Tariff Cuts, Steel Tariffs Remain Unchanged
Currently, the negotiation points between South Korea and the U.S. include the reduction of South Korea’s non-tariff barriers to the U.S., including agricultural and livestock products, and the reduction of tariffs on automotive products from the U.S. The Alaska LNG development project agreed upon by the U.S. and Japan is also cited as a topic for negotiation between South Korea and the U.S.
U.S.-Japan Deal Sets Precedent for Korea-U.S. Negotiations
Furthermore, the United States has been demanding that South Korea lift the age limit on U.S. beef (30 months) and further open its rice market. The South Korean government is reported to have a policy of excluding sensitive issues such as rice and beef from the negotiations.
