Japan weighs concessions as auto tariff deadline looms in U.S. trade talks

Japan is preparing for a new round of trade discussions with the U.S. as both sides try to resolve differences before higher tariffs on Japanese automobile exports take effect in July.

Japan’s chief trade negotiator, Ryosei Akazawa, may visit Washington as early as next week for a third round of bilateral trade talks with the United States, according to two sources familiar with the matter. The timing of the visit remains flexible, depending on progress made during ongoing staff-level negotiations.

Finance Minister Katsunobu Kato is also scheduled to travel to Canada next week for a G7 finance ministers’ meeting. While there, he may hold discussions with U.S. Treasury Secretary Scott Bessent, including topics such as currency markets.

Japanese officials are reportedly exploring a package of proposals aimed at gaining concessions from the U.S. These could include increased imports of American corn and soybeans, expanded technical cooperation in shipbuilding, and potential revisions to vehicle inspection standards for imported cars.

A key issue for Japan remains securing exemptions from planned U.S. tariffs on automobiles and auto parts, a significant component of the country’s export sector. The U.S. government imposed a general 10% tariff on April 2, with Japan facing a specific 24% rate from July unless an agreement is reached.

“We will seek reviews of the range of U.S. tariff measures, such as those on automobiles, auto parts, steel, aluminium as well as the reciprocal tariffs,” Akazawa stated during a press briefing on Wednesday.

Japanese policymakers have said they are reluctant to conclude any trade agreement unless tariffs on automobiles are lifted. Industry concerns have already emerged, with Mazda reporting a 45.1% decline in net profit for the fiscal year ending in March and refraining from issuing forecasts for the upcoming year.

During a previous visit to Washington on May 1, Akazawa raised the auto tariff issue with Bessent, though no agreement was reached at that time.

Initial expectations of concluding a deal around the June G7 summit have waned. Domestic media reports suggest Prime Minister Shigeru Ishiba is now aiming for an agreement by early July, ahead of Japan’s upper house elections later in the month.

Political sensitivities, especially regarding agriculture, remain a factor. Senior ruling party member Hiroshi Moriyama, a close aide to the prime minister, has stated opposition to expanding imports of U.S. rice.

Some analysts suggest that the U.S. may not prioritise a swift agreement with Japan, as the broader economic impact of tariffs on Japan is seen as less significant compared to other trade partners.

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