At Least for Cars, Preliminary U.S.-Japan Trade Deal Keeps the Status Quo

There’s good news if you’re a U.S. farmer, however. A preliminary deal reached between the two countries this week would keep existing auto tariffs in place, though President Donald Trump claims there’s still the possibility of a hike.

It was the threat of import tariffs that brought Japan to the table following the U.S.’s 2017 pullout of the Trans-Pacific Partnership, and the agreement in principle announced this week keeps new tariffs off the table, though auto groups continue demanding action on an issue Lee Iacocca used to rail about: reciprocity.

Trump and Japanese Prime Minister Shinzo Abe signalled an agreement on the core principles of the deal during the G7 summit in Biarritz, France on Sunday. That city, by the way, is surely well stocked with Cadillacs.

As reported by Reuters, the preliminary deal would cut agricultural tariffs and potentially spell a boon for U.S. producers of beef, pork, corn, wheat, wine, and other products. Certain Japanese industrial goods would be exempted from tariffs, as well. The deal aims to generate new demand for U.S. products hit hard by the ongoing U.S.-China trade war, as well as making the United States more competitive with TPP-signed nations.

“If you say ‘win-win,’ it’s a capital letter ‘Win’ for the U.S. and a small-letter ‘win’ for Japan,” former Japanese ambassador to the U.S. Ichiro Fujisaki told The Japan Times.

Not exempted from existing tariffs are Japanese cars and trucks. Inbound passenger cars will retain a 2.5-percent tariff, with trucks saddled with a 25-percent import levy. When asked about the possibility of following through on earlier tariff threats, Trump responded, “Not at this moment, no, not at this moment. It’s something I could do at a later date if I wanted to but we’re not looking at that.”

For the Detroit Three, in this case represented by the American Automotive Policy Council, the preliminary deal sparked a take on the age-old labor question “What have you done for me lately?”

“Any potential trade agreement with Japan should lead to truly reciprocal market access for U.S. automakers,” AAPC president Matt Blunt said in a statement. “It must address long-standing non-tariff barriers in Japan, and include strong and enforceable provisions that prevent Japan from manipulating its currency to gain an unfair and unearned advantage for its auto exports.”

The vast majority of the trade deficit between the U.S. and Japan — $56 billion — stems from the lopsided flow of automobiles.

[Image: Fiat Chrysler Automobiles]