Japan Eyeballs Minor Trade Deal With U.S. Slated for September
The United States and Japan are working on a trade deal revolving around agriculture and automobiles. As much as you’re probably dying to hear about the farming aspects, we’re going to focus a bit more on the latter. Boiled down, the arrangement is reported to deliver preferential treatment for U.S. farmers hoping to expand into the Japanese market while lessing duties on Japanese auto parts.
President Donald Trump has noted in the past that he’s displeased with any country holding a trade surplus over America’s head and Japan has one. Last year, it amounted to $67.6 billion in goods — most of it relating directly to automobiles. This initially encouraged the president to threaten tariffs on Japanese imports. However, Japan’s close ties to the United States bought it some time and any legitimate danger has been postponed to encourage trade discussions.
Trump and Japanese Prime Minister Shinzo Abe were reportedly in heavy talks at Osaka’s G20 summit in June, with accounts from both sides being favorable. The Donald even went so far as to praise Japanese automakers for their increased investments into the U.S. “I appreciate the fact that you’re sending many automobile companies into Michigan, and Ohio, and Pennsylvania, and North Carolina,” he said during his time Abe.
However, no details on the presumed productive talks emerged until Tuesday — when Politico reported some kind of deal was being arranged for September. Reuters has since said that three industry sources have confirmed that the arrangement was farming/auto related. Most framed the situation as a micro-agreement, adding that nothing had yet been finalized and all were hoping for a broader trade deal in the future.
From Reuters:
The deal would not require congressional approval since the U.S. president can eliminate or reduce tariffs on products that have a duty of less than 5 [percent] duty, and most auto parts tariffs are roughly 3-6 [percent].
Asked about the possibility of such a deal, a Japanese government official declined to comment but said working level discussions on trade were under way.
The official said no significant progress would come until after July 21 elections for Japan’s upper house of parliament.
“We have a mutual understanding that we should find common ground so we can find a final settlement,” the official told Reuters.
[Image: Sakarin Sawasdinaka/Shutterstock]
A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.
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The Japanese aren't going to buy F-150's. As far as cars are concerned, what American car would they buy? Probably only Tesla, and maybe some Jeeps, although the small/efficient Jeeps are not US made. I don't think Model 3 has launched in Japan yet, at least bestsellingcarsblog has no data on it. However Tesla sold 14k cars in Europe last month, which if you average $50k, is $700M in a single month of US exports. Tesla could make a dent, but no matter what Americans are likely going to continue buying way more Lexus. Most Toyota/Honda/Nissan are US assembled these days, Japanese companies tend to be great corporate citizens.
Trump's tariff policies will result in (even) more complacency in Detroit, that is no longer forced to be as competitive and innovative as possible, protected within its own home market. American consumers will no longer get the best, and for foreign imports they will have to pay more.