Japan’s Economic Revitalisation Minister Ryosei Akazawa is set to visit the United States for critical trade negotiations aimed at addressing ongoing tariff issues that have significantly impacted the nation’s economy. As the USTR’s chief tariff negotiator, Akazawa will be diving into negotiations from the start of this upcoming weekend. This is the third round of technical discussion to solve these urgent and troubling trade obstacles.
The backdrop of these negotiations is a hostile trade environment for Japan. Today the United States has a 25% tariff on Japanese auto imports. The maritime sector is essential to the country’s trade, but it leads the country in economic growth. Even before the impact of the disaster kicked in, in April, Japan’s vehicle exports were down almost 6% compared to last year. This decrease was part of an overall decline of almost 2% in exports to the US, Japan’s most important trading partner.
Despite these steep increases, implemented during the administration of President Donald Trump, the American tariffs have had a significant impact on Japanese exports. Earlier in the year, Japan’s exports surged as businesses worked to beat tariffs that were gradually implemented since Trump’s second term began. The last few months have turned that prospect on its head.
Japan’s exports to the United States took a major hit, plunging by over 11% in April. Though Japan’s total imports in fact fell by 2.2% over the same month. Japan posted its first trade deficit in three months. This unprecedented decline in its population has set alarm bells ringing and brought into stark focus the increasing pressures being placed upon its economy.
The recent Japanese yen’s appreciation against the US dollar has made this situation more complex. This appreciation has, in real terms, largely wiped out the competitiveness of Japanese exports when expressed in yen terms. Anything that weakens Japan’s exports will weaken Japan’s economic growth. That’s particularly alarming given that the economy shrank by 0.7% during the final quarter.
Over the past several months, industry analysts have raised alarms over the long-term impact of these tariffs on regional automakers. S&P Global Ratings noted that “Regional automakers face increased operating costs and potential revenue losses because their US sales depend on diverse production bases and supply chains.”
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