Trump Says U.S., Japan Reach Initial Agreement on Tariffs

Source: By Sarah McGregor, Bloomberg • Posted: Tuesday, September 17, 2019


President Donald Trump said his administration will enter into an initial trade accord over tariffs with Japan in the coming weeks while Tokyo warned any final deal must include assurances that Washington won’t slap new duties on $50 billion of Japanese automobiles.

In a notice to Congress on Monday, Trump also said the U.S. will be entering an “executive agreement” with Japan over digital trade. There was no mention by Trump if he’ll end the threat to impose tariffs on Japanese auto imports as part of the trade deal.

“My administration looks forward to continued collaboration with the Congress on further negotiations with Japan to achieve a comprehensive trade agreement that results in more fair and reciprocal trade between the United States and Japan,” Trump said in the statement released by the White House via email.


Shinzo Abe with Donald Trump at the G7 summit on Aug. 25.

Japanese Foreign Minister Toshimitsu Motegi, the country’s point man for the trade talks with Washington, said Tokyo wanted to see the Trump administration lay to rest the threat of new auto tariffs before agreeing to a final trade deal.

“We are aware of the internal process that is going on in the U.S. and the president’s notice of the U.S-Japan trade negotiations,” Motegi told reporters in Tokyo on Tuesday. He added that language assuring Japan on car tariffs was under consideration.

Key details still need to be worked out. While Japan is a key export market for U.S. rice farmers, American growers won’t get increased sales under the current terms of the deal, people familiar with the accord said. U.S. producers hope the issue will be dealt with in the second phase of negotiations between the two countries, according to one of the people.

Read More: Japan Excludes U.S. Rice in Initial Trade Agreement on Tariffs

The threat of steep new U.S tariffs on imported automobiles and components has loomed over the auto industry and major American trading partners since the Commerce Department in February found those imports could impair national security.

‘In Principle’

After meeting Japanese Prime Minister Shinzo Abe at the G-7 summit in France last month, Trump announced that the two countries had struck a trade deal “in principle.” The leaders said they hoped to sign the pact on the sidelines of the United Nations General Assembly in New York later this month.

Japanese equities were little changed Tuesday, with the Nikkei 225 Stock Average inching up 0.1% to 22,001. U.S. stock futures declined early Tuesday in New York.

U.S. Trade Representative Robert Lighthizer has said the limited trade deal will cover agriculture, industrial tariffs and digital trade. The USTR said on Monday it had no further comment and Trump provided no details about what was in the initial deal.

Under an earlier proposal, Japan would cut tariffs on U.S. agricultural products, including beef, pork, dairy products, wine and ethanol. The U.S. would cut levies on some Japanese industrial products, but not on cars. Japanese media has reported that the sides had agreed to lower tariffs on U.S. beef and pork to levels offered to members of the Trans-Pacific Partnership.

Read a QuickTake: What’s at Stake and at Risk in U.S.-Japan Trade Talks

Abe agreed to direct talks in September 2018 after Trump hit Japan’s steel and aluminum exports with tariffs and threatened to do the same on all imported cars, including those made in Japan.

Trump earlier this year delayed a decision until November over whether to impose new levies of as high as 25% on imported vehicles over national security grounds to allow more time for talks with Japan and the European Union. He also agreed with Japan that there would be no new tariffs while trade talks continue.

— With assistance by Chian-Wei Teo, Jon Herskovitz, and Takashi Hirokawa