The US has agreed a deal to reduce tariffs with Japan, president Donald Trump has announced.
Writing on his Truth Social platform, Trump said that the “massive” deal will reduce the US tariff rate on Japanese goods to 15% ahead of a deadline on 1 August that would have seen the rate hit 25%.
As we noted in our tariff live update story, the turbulence around the rate has already impacted bilateral trade between the two countries, with two consecutive year-on-year drops of 11% in Japanese exports to the US in May and June.
Trump added that Japan is set to open its market more fully to American “cars and trucks” and “rice and certain other agricultural products”, as well as other unspecified products. He also said Japan “will invest, at my direction” an additional US$550bn into the US, though he provided scant detail except to say that this would create “hundreds of thousands” of new jobs.
As reported by the BBC, Japanese prime minister Shigeru Ishiba remarked that the deal secured the lowest tariff rate for a country operating a trade surplus with the US since Trump’s ‘Liberation Day’ tariff announcements. It has been a turbulent few days for Ishiba, whose Liberal Democratic Party (LDP) lost its majority in Japan’s upper house at an election over the weekend. The LDP also lost its majority in the lower chamber last year.
Europe toughens up
The European strategy on US tariff negotiations could be set to become more hard-headed, meanwhile, according to reporting by the FT.
France and Germany, the EU’s two largest economies, are said to be pushing for trade policy retaliation against the US via the bloc’s ‘anti-coercion instrument’ (ACI), which would allow it to put restrictions on US imports and prevent US companies from accessing public tenders.
One European diplomat, speaking anonymously to the FT, said that use of the ACI would be “nuclear”. He added that it remained unclear whether the action would gain majority support within the EU, calling the situation “too fluid to gauge with any degree of certainty if member states favour it”. Another suggested there was a “silent majority” against its use.
But as German leader Friedrich Merz prepares to meet French president Emmanuel Macron in Berlin today, officials from the two major member states are sounding a more assertive note.
Marc Ferracci, French industrial minister, said in Berlin this week that “we need to change our negotiation method”.
“We need to be able to retaliate and to put on the table any option that would change the balance of the negotiation.”
Canada expectations cool
The prospect of a quick deal between the US and Canada on tariffs also appears distant, according to remarks by Canadian prime minister Mark Carney and other politicians north of the border.
Politico reported yesterday that Carney told reporters he is willing to take “all the time that’s necessary” to find a deal that is “in the best interest of Canadians”. He suggested that achieving a “good deal” is more important than reaching any deal ahead of the 1 August deadline for a higher US tariff rate of 35%.
The premier of Quebec, François Legault, also suggested that an acceptable deal didn’t appear imminent:
“We would like to have the ideal deal, as fast as possible. But what can we get? You almost need to ask Donald Trump, and I’m not even sure he knows himself what he wants.”
