Japan-U.S. Tariff Negotiations: Aim for Comprehensive Agreement Including Automobiles

Editorial

14:00 JST, May 26, 2025

Japan-U.S. tariff negotiations are in full swing. The Japanese government needs to steadily carry out the negotiations toward a comprehensive agreement, including a review of high U.S. tariffs on automobiles.

Ryosei Akazawa, minister in charge of economic revitalization, visited the United States and held the third round of tariff negotiations with U.S. Commerce Secretary Howard Lutnick and other officials. Treasury Secretary Scott Bessent, who serves as chief negotiator for the United States, was absent.

“We were able to have a more frank and in-depth exchange than last time,” Akazawa explained to reporters after these latest negotiations. He expressed his intention to continue close talks, saying that “it would be desirable to reach some kind of agreement” in time for the Group of Seven summit to be held in June.

The most difficult issue in the negotiations is the handling of additional 25% tariffs on specific products such as automobiles as well as steel and aluminum products. Japan is seeking the elimination of not only reciprocal tariffs but also tariffs on automobiles and other specific products.

In contrast, the U.S. side wants to maintain the basic tariff rate of 10% and focus negotiations on the 14% surcharge in reciprocal tariffs.

The automobile industry is the nation’s most important sector, as it has a broad base, supporting about 5.5 million jobs in Japan, including those in related businesses. It accounts for about 30% of exports to the United States. The Japanese government should seek a comprehensive agreement that includes not only reciprocal tariffs but also tariffs on vehicles.

The situation surrounding U.S. tariff negotiations has been changing dramatically.

In early April, Bessent said, “Japan is at the front of the queue” for trade negotiations with countries.

However, the United States reached an agreement with the United Kingdom first on May 8.

The United States had imposed abnormally high tariffs on imports from China, in what can effectively be described as an embargo. But on May 12, the United States agreed with China on a significant reduction in tariffs. Amid growing dissatisfaction with high tariffs and inflation in his country, U.S. President Donald Trump was likely eager to achieve results quickly.

It is important for the Japanese government to analyze the status of U.S. negotiations with other countries and utilize the results of its analysis in discussions with the United States.

The imposition of reciprocal tariffs has been suspended for 90 days until early July. The United States plans to conclude negotiations with each country during this period.

Prior to the latest round of negotiations, Prime Minister Shigeru Ishiba held telephone talks with Trump and reaffirmed that they would meet on the sidelines of the June G7 summit in Canada. This meeting will likely be a critical juncture.

Tokyo has so far proposed an expansion of imports of agricultural products. It will also consider joint production in the shipbuilding sector, which the United States considers crucial for its economic security. Japan should proceed with meticulous talks with the United States to pave the way for a framework that will benefit both countries.

(From The Yomiuri Shimbun, May 26, 2025)