Japan - wosening news on execution of US trade deal

US - Japan Trade Deal - wosening news on execution,

Tokyo believed it had negotiated a promise that Japan and the EU would get the same 15% maximum tariff on virtually all items in Trump’s country-wide “reciprocal tariffs.” Tariffs below 15% would be raised to 15%. Tariffs that were above 15% before Trump took office would go no higher. This is what seems to have been agreed with the EU, but not according to the US Japan, when President Trump issued his official Executive Order.

When it comes to Japan and every other nation outside the EU, the Executive Order says that 15% is applied in addition to existing tariffs, a procedure called “stacking.” For example, Japan’s beef exports to the United States were subject to a 26.4% Most-Favored-Nation tariff. Instead of staying at 26.4%, the tariff will go to 41.4%. On textiles, the tariff will go from 7.5% to 22.5%.

Akazawa, the Japanese chief negotiator, who is in Washington, seems to have failed to move the Trump administration on a separate tariff provision that is even more vital to Japan’s economy: tariffs on autos.

The “no stacking” provision discussed above applies only to the so-called reciprocal tariffs that apply country-wide. In addition, using a different law, Trump has applied stiff tariffs on sectors where he claims reduced imports are essential to US national security. So far, they include autos and auto parts, steel, aluminum, and computer chips. In this case, the US assured Japan it would reduce the 25% provisional tariff to 15%. However, it has not yet done so and has not made clear when (perhaps if) it will do so.

Akazawa tried to get Lutnick to make a clear promise on this issue, but it appears that he got no reassurance on this matter. Akazawa is staying on in Washington until Friday. The Japanese government is increasingly irate over what it believes are breaches of contract by Washington.

A few days ago, Akazawa said publicly what many leaders in the government and business are saying privately. “We are in a situation where a hegemonic nation is trying to change everything from diplomatic rules to the world order. I believe that both the economy and the geopolitical situation are being placed in a turbulent situation. Navigating through this with precision is a challenging task that can’t be accomplished with a simple solution.”

Source: Richard Katz, Nikkei, Japanese Media.