Asger Risom
As Washington prepares to impose steep tariffs on Japanese imports, Tokyo is vowing to defend its auto sector in ongoing negotiations. With a July 20 election looming and economic risks mounting, Japan’s position in talks with the U.S. has become increasingly urgent.
As Washington prepares to impose steep tariffs on Japanese imports, Tokyo is vowing to defend its auto sector in ongoing negotiations. With a July 20 election looming and economic risks mounting, Japan’s position in talks with the U.S. has become increasingly urgent.
Tokyo Seeks U.S. Auto Tariff Concessions
Japan’s chief trade negotiator Ryosei Akazawa said a deal with the U.S. must include relief on auto tariffs. This comes after President Trump announced a 25% tariff on Japanese goods set to take effect August 1.
Active Negotiations Underway
Akazawa spoke by phone for 40 minutes with U.S. Commerce Secretary Howard Lutnick. Both sides agreed to continue talks “actively,” aiming for a comprehensive trade package covering tariffs, non-tariff barriers, and economic cooperation.
No Deal Without Autos
Akazawa emphasized that protecting Japan’s car exports—a critical part of the country’s economy—is non-negotiable. “There’s no point striking a deal without an agreement on automobile tariffs,” he said.
Agriculture Off the Table
Akazawa made clear Japan would not trade away its agriculture sector in pursuit of a fast agreement. The government is refusing to rush a deal at the expense of domestic farming interests.
Trump Opens Door to Delay
President Trump has signed an executive order to delay tariffs until August 1 but hinted he’s open to further postponement if other countries offer acceptable trade terms.
Yen Drops as Markets React
News of the tariffs—and uncertainty surrounding the talks—pushed the yen to a two-week low. Traders now doubt the Bank of Japan will announce a near-term rate hike at its July 31 meeting.
Political Calendar Complicates Talks
Japan’s upper house election on July 20 adds political complexity. Prime Minister Shigeru Ishiba has pledged to avoid “easy concessions,” with polls suggesting his ruling coalition may lose its majority.
Recession Fears Grow
Economists warn that the tariffs could push Japan’s already struggling economy into recession. The 25% duties could shave nearly a full percentage point off annual growth, analysts say.
No Plans for Currency Talks
Finance Minister Katsunobu Kato said there are no current plans to discuss exchange rate issues with U.S. Treasury Secretary Scott Bessent, leaving monetary diplomacy off the table for now.
