Japanese Foreign Minister Takeshi Iwaya announced on Friday that Japan is preparing to resume trade talks with President-elect Donald Trump, focusing on the elimination of tariffs on automobiles and auto parts. These negotiations build on an agreement forged during Trump’s first term, which shielded Japan’s auto exports from additional tariffs while opening Japanese markets to U.S. agricultural products.
“In the annex of the Japan-U.S. Trade Agreement, the U.S. side has included automobiles and automobile parts in the list of items for which further negotiations on tariff elimination will be held,” Iwaya said during a parliamentary session. “Negotiations will be held on the assumption that tariffs will be eliminated.”
The Japan-U.S. Trade Agreement, struck during Trump’s initial presidency, served as a cornerstone for trade relations between the two nations. Under its terms, U.S. farmers gained increased access to Japanese markets, an achievement that pleased American agricultural sectors. Meanwhile, Japan managed to avoid the hefty tariffs Trump had previously threatened to impose on auto exports.
The automotive sector, which accounts for a third of Japan’s exports to the United States, is vital to the Japanese economy. According to the Finance Ministry, the U.S. was Japan’s largest export market in 2023. With Trump returning to the White House, Japan is bracing for the potential revival of protectionist trade policies that characterized his first term.
During his campaign, Trump pledged to impose additional 10% to 20% tariffs on all imports, including those from Japan. Such a policy could severely impact Japan’s economy, which relies heavily on its robust export industry. Automobiles and related components are particularly vulnerable.
Foreign Minister Iwaya acknowledged the uncertainties surrounding the incoming administration. “The U.S. is currently in a period of government transition,” he said. “We must gather information and analyze it carefully to see what approach the new administration will take on trade policy so that we can deal with it.”
The Japanese government is scrambling to craft a strategy to mitigate the potential fallout from Trump’s trade policies. Prime Minister Shigeru Ishiba, who has so far had limited interaction with Trump, is working to establish a rapport. Ishiba’s only direct communication with the President-elect was a brief five-minute phone conversation following the election.
Hopes for an earlier meeting with Trump were dashed when the President-elect declined meetings with world leaders before his January 20 inauguration. Ishiba is now seeking alternative avenues to open dialogue, potentially building on the diplomatic foundation laid by his predecessor, the late Prime Minister Shinzo Abe.
Analysts highlight the critical role of Shinzo Abe’s relationship with Trump in maintaining strong bilateral ties during Trump’s first term. Abe was among the first foreign leaders to visit Trump after his election in 2016, famously presenting him with a gold-plated golf club. This personal connection helped Japan navigate challenging negotiations and avoid some of Trump’s harsher trade measures.
“Close personal ties between Trump and Abe played a role in smoothing out trade and diplomatic relations between the two nations,” said Takashi Nakamura, a political analyst based in Tokyo. “It remains to be seen whether Ishiba can replicate this dynamic.”
Japan’s reliance on the U.S. market makes these negotiations crucial. In 2023, cars and auto parts alone accounted for a staggering one-third of Japan’s exports to the U.S. Any disruption to this trade flow could have far-reaching economic implications.
While the Japan-U.S. Trade Agreement provides a framework for discussions, Tokyo faces significant challenges in balancing its economic interests with the realities of Trump’s “America First” agenda. If the U.S. imposes sweeping tariffs, Japan’s auto industry could face higher costs, reduced competitiveness, and strained supply chains.
Japan is not alone in grappling with the potential impacts of Trump’s trade policies. Nations worldwide are reassessing their strategies to address the resurgence of his protectionist agenda. Trump’s first term was marked by renegotiations of major trade agreements, including the U.S.-Mexico-Canada Agreement (USMCA) and the U.S.-China Phase One Trade Deal.
For Japan, the stakes are particularly high. Beyond autos, other key sectors such as electronics and machinery could also be affected by broader tariff measures. Foreign Minister Iwaya stressed the importance of vigilance and adaptability. “We must be proactive in securing Japan’s economic interests while maintaining strong bilateral ties with the United States,” he said.
As Tokyo gears up for these pivotal trade talks, the government is weighing its options. Japan’s strategy will likely focus on:
- Leveraging Existing Agreements: Ensuring the terms of the Japan-U.S. Trade Agreement are upheld and expanded to include tariff elimination for auto exports.
- Diversifying Export Markets: Reducing reliance on the U.S. by strengthening trade relationships with other nations, including those in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
- Building Diplomatic Channels: Establishing a strong rapport between Prime Minister Ishiba and President-elect Trump to facilitate constructive negotiations.
The road ahead is fraught with uncertainty. Trump’s return to power signals potential turbulence in global trade, and Japan must navigate these challenges carefully to safeguard its economic future.
- 2019: Japan-U.S. Trade Agreement signed, protecting Japanese auto exports from additional tariffs while granting U.S. farmers increased access to Japan.
- 2023: U.S. becomes Japan’s largest export destination, with automobiles and auto parts comprising a third of shipments.
- November 2024: Trump elected President for a second term, reigniting concerns over protectionist trade policies.
- January 2025: Trump’s inauguration, marking the official start of trade negotiations with Japan under his new administration.
