Japanese Prime Minister Ishiba Shigeru said on Tuesday he found it “deeply regrettable” that President Donald Trump announced he would impose reciprocal tariffs of 25 percent on exports from Japan.
Ishiba said negotiations would continue, but “as of now, there are still issues that both Japan and the United States cannot resolve.”
Trump said on Monday he notified the leaders of Japan and South Korea they would be facing higher tariffs on August 1 because they did not reach acceptable trade agreements with the United States.
Trump’s letters to Tokyo and Seoul said that barring a last-minute breakthrough in negotiations before August 1, the tariffs could only be avoided if Japanese and South Korean companies move their factories to the United States. Trump said he would ensure regulatory approval for relocating factories would be completed in “a matter of weeks.”
“If, for any reason, you decide to raise your tariffs, then whatever the number you choose to raise them by will be added onto the 25% that we charge,” Trump warned.
Ishiba is facing some criticism back home for fumbling trade negotiations that should have gone more smoothly, given Japan’s long and bountiful economic relationship with the United States and Trump’s good relations with Japan.
The big problem appears to be Ishiba relying too heavily on a pledge to invest a trillion dollars in the United States, which the Japanese prime minister made upon his first meeting with Trump in February. Trump was pleased with the offer, but as it turned out, he was serious when he said other aspects of Japan’s trade relationship with the U.S. needed to be addressed.
Ishiba and his team evidently thought the trillion-dollar investment pledge would smooth over all other issues, but Trump grew increasingly frustrated that Tokyo refused to budge on issues such as buying more rice from the United States.
“To show people how spoiled Countries have become with respect to the United States of America, and I have great respect for Japan, they won’t take our RICE, and yet they have a massive rice shortage,” Trump vented on Truth Social last week.
The United States has a gigantic trade deficit with Japan, hovering at around $70 billion for the past decade, with a significant dip during the Wuhan coronavirus pandemic. Trump wants Japan to close that gap by purchasing more agricultural and energy products from the United States.
Japanese Economy Minister Akazawa Ryosei reportedly wants the U.S. to lower tariffs on automobiles, one of Japan’s most vital imports, but he is reluctant to reduce tariffs on rice and other agricultural products in return.
Akazawa apparently overestimated how much influence he would gain over Trump by maintaining a good working relationship with Commerce Secretary Howard Lutnick. Soon after Trump announced his first draft of “Liberation Day” tariffs, Akazawa popped up at the White House wearing a “Make America Great Again” hat, among the first in line to negotiate. His enthusiasm for making a deal soon ran into the harsh reality that he could not offer what President Trump wanted.
“Japan is holding on to a set of assumptions about alliances, cost-benefit calculations and grand strategy that no longer fully apply,” Lizzi Lee of the Asia Society Policy Institute told Nikkei Asia on Wednesday.
“For decades, Japan’s strategic posture was built on the idea that its role as America’s most reliable ally in Asia, along with its massive foreign-direct-investment footprint in the U.S. and its centrality to the China-Taiwan question, would protect it from blunt trade pressure,” Lee explained.
“This moment shows that those assumptions are being tested in real time. The old political and economic logic, where security contributions and political alignment bought you economic indulgence, seems to carry much less weight nowadays,” she said.
“Ishiba insisted that Japan makes extraordinary contributions to the American economy as a leading investor, as an indispensable partner on security in the Indo-Pacific, and therefore that should be reflected in the terms of negotiations. That’s not what President Trump has been signaling,” said Mireya Solis of the Brookings Institution.
President Trump has also been signaling that he is not worried about the prospect of Japan drifting into China’s orbit, at least not worried enough to abandon his concerns about the trade deficit.
On Monday, opposition leader and former prime minister Noda Yoshihiko advised Ishiba to appeal directly to Trump for an extended tariff deadline, instead of relying on Akazawa and Lutnick to work things out.
“There is a chance of a breakthrough if the two leaders talk,” Noda said.
One of Ishiba’s challenges is that electrons are coming up on July 20, and the prime minister is not looking good in the polls. His cabinet’s approval rating was 31 percent on Monday, a decline of eight percent from early June.
Ishiba’s Liberal Democratic Party (LDP) lost its coalition majority in the lower house of the Japanese parliament in the 2024 election. If LDP gets walloped in the upper house this month Ishiba’s administration could be all but crippled.
High consumer prices are a major issue in the election, so a tariff fight with the United States will not help Ishiba, but he may also feel constrained from making trade concessions that would anger Japanese voters. Ishiba may also feel he cannot afford the embarrassment of talking directly to Trump but coming away empty-handed.
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