Japan is finally stepping into the ring for a fight it had managed to dodge for more than two years: Bilateral trade talks with U.S. President Donald Trump.
The world’s third-biggest economy has a lot at stake in the talks, which are expected to start next week in Washington just as the U.S.’s negotiations with China appear to be winding down. Prime Minister Shinzo Abe is desperate to avoid tariffs or quotas on lucrative auto exports, while Trump wants to crack open Japan’s agricultural market and reduce a $60 billion trade deficit.
Abe has poured energy into courting Trump to maintain a strategic relationship that secures his country against potential threats from North Korea and China. But that doesn’t mean Japan will roll over on trade: Abe’s government is determined to avoid giving the U.S. a better two-way deal than the multilateral pacts he’s negotiated with Europe and Pacific Rim nations.
“It’s the U.S. who asked for these bilateral negotiations,” said Ichiro Fujisaki, a former Japanese ambassador to the U.S., who’s now president of the Nakasone Peace Institute. “So, it’s the U.S. who should put to us what they want, rather than us offering this and that before being asked.”
The talks add to worries among investors as Trump turns his gaze from China to trade grudges elsewhere. The U.S. leader, who will face questions on his success in rebalancing America’s trade relationships in next year’s presidential campaign, has signaled a willingness to continue market-disrupting tariff threats despite growing economic concerns.
Abe only agreed to bilateral talks after Trump hit Japan’s steel and aluminum exports with punitive tariffs last year and later threatened to impose levies of as much as 25 percent on all imported cars, including those made in Japan. Trump faces a decision in May on how to proceed with the auto tariffs.
“Japan is now negotiating,” Trump told reporters last month. “They haven’t wanted to negotiate for many years, but now they’re negotiating. It’s called ‘tariffs.’”