High US tariffs on Japanese cars remain unresolved and threaten Japan’s auto industry.
Tokyo will need full support as it prepares to implement a new trade deal with the United States, says Japanese Prime Minister Shigeru Ishiba. Announced last month with fanfare as a “win-win” for both sides, Ishiba now warns that the agreement will be harder to realize than to get agreed.
The agreement helped Japan avoid a looming trade crisis. Under intense negotiations, the two sides reached a deal just ahead of a critical deadline on August 1.
The US had threatened to slap a 25% tariff on all Japanese imports. Instead, they settled on a reduced 15% flat tariff — seen as a concession that spared Japan from deeper economic pain.
Trade negotiators highlight the absence of a formal agreement
While agreement provided some relief, skepticism is rising about the deal itself, and for good reason: Not much of it is documented.
During a parliamentary debate on Wednesday, Ryosei Akazawa, Japan’s chief trade negotiator, also said that the issue was a concern.
Ryosei Akazawa answered questions from opposition lawmakers and said he realized a written agreement would be useful. He said the United States had also gone by verbal understandings, rather than formal documents, in its agreements with the European Union and South Korea.
Economists and legal commentators have wrung their hands over the absence of a paper trail, warning that Japan could be left with little recourse if the US reverses course without anything in writing. The haste in signing the deal just after the elections leads many to suspect it was hurried; some believe it was politically timed.
Opposition leader Yukiko Tanabe took a harsher view, saying this was no time for ambiguity. She noted that Japanese industries would still be exposed to risks without something in writing.
Unresolved auto tariffs pressure Japan’s economy
The US tariff on Japanese automobiles is a major unresolved issue in the deal. Even after the recent agreement, Japanese cars remain subject to a 27.5% tariff — a long-standing 2.5% base rate and a newer 25% penalty that the US has not officially lifted.
The impact is being felt across Japan’s auto sector. Autos are the largest export to the United States and comprise almost 10% of Japan’s total output. Automakers have said that the ongoing uncertainty over tariffs threatens to trigger additional job cuts, lower capital spending, and reduced production.
With industry analysts arguing that Japan is getting only a reprieve over other goods, the White House has threatened a 15% across-the-board tariff — unsure of what to expect on car tariffs, either, which remain an effective ticking time bomb.
However, trade analyst Satoshi Yamada in Tokyo said the apparent “win-win” agreement could deteriorate into a one-way loss if Washington does not scrap car tariffs soon.
In response, Ishiba has promised to make auto tariff relief a top priority in follow-up negotiations.
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