Japan Tells US: No Trade Deal Unless Auto Tariffs Reviewed

Talks on a trade deal between the United States and Japan have got off to a rocky start, with Tokyo pressing Washington to review its extra tariffs on Japanese autos, according to a new report.

US officials have sought to limit the scope of the talks to the 14% “reciprocal tariff” imposed on Japan, and excluded further levies imposed on automobiles, steel and aluminium – “materials which Tokyo regards as essential,” the Yomiuri Shimbun said on Sunday.

“Tokyo has insisted that it will make no concessions as it presses for a complete overhaul of each of the duties imposed .. including those on auto parts,” the report said.

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Prime Minister Shigeru Ishiba spoke to reporters after being briefed by economic revitalisation minister Ryosei Akazawa on the second round of talks in the US.

“There is still a wide gulf between [Japan’s and the United States’] positions and no common ground has emerged,” he was quoted as saying.

“We are [pushing to negotiate] all the tariffs, including those on automobiles, steel and aluminium,” Ishiba said, adding that new duties on auto parts were “extremely regrettable” and Japan would “continue to demand that they be reversed.”

The 25% automotive duty has been applied to every country, and Washington has said it will not grant Japan any special treatment.

But Tokyo has said autos are the country’s core industry and carmakers have an extensive supply chain for parts makers. If the tariffs remain it “could cause the entire Japanese economy to stall,” the report said.

An intensive series of ministerial talks are planned for coming weeks and Tokyo says individual issues and technical details are very important.

Tariffs ‘heighten security, economic risks’

Business leaders in Tokyo have likened the imposition of US tariffs to a “shock and awe” military campaign and warned that the country has been placed in a situation with the potential to increase its security and economic risks.

They say it may be true that Japan has a trade surplus of 10 trillion yen ($69.5 billion) with the US, but note that it excludes a digital services deficit of 6 trillion yen ($41.7 billion) to tech companies based in the United States.

They want the US to develop a hybrid system of ‘America First’ and free trade, warning that they might forced to form a trade bloc with Europe, because of their lack of natural resources and heavy reliance on free trade, if the US does not ease its demands.

Jun Sawada, chairman of the Japan-US Business Council, said they would prefer to stand by the US as an ally and expand their Quad security framework and be part of a ‘minilateral’ trade system.

However, they realize that other aspects of the bilateral relationship may end up being “bargaining chips” in the current trade tussle, such as “exchange rates and national security,” he was quoted as telling local media.

US eyeing deal with India

Meanwhile, trade talks with other countries appear to be progressing further.

US Treasury Secretary Scott Bessent said last week that one of the first trade deals that the administration will sign is likely to be with India.

Bessent told reporters many top trading partners of the United States had made “very good” proposals to avert US tariffs.

President Trump suggested on the weekend that trade deals with unspecified countries are in the pipeline this week and downplayed concern about the risk of an intense global trade war.

He also said in a TV interview on Sunday that his administration was willing to soften the hefty 145% tariffs on imports from China.

“At some point, I’m going to lower them, because otherwise, you could never do business with them, and they want to do business very much,” Trump said on NBC’s Meet the Press.

But the president also told reporters on Air Force One that he has no plans to speak with his Chinese counterpart President Xi Jinping, which suggests there is not much movement on that front as of yet.