Japan’s trade negotiator Akazawa has said there is no point striking a deal with the US without an agreement on automobile tariffs.
Japan’s top trade negotiator, Ryosei Akazawa, has insisted that any trade deal with the US must include tariff concessions for Japan’s vital automobile industry, following President Donald Trump’s decision to impose 25% tariffs on Japanese goods starting 1 August.
Akazawa revealed on Tuesday that he had held a 40-minute telephone discussion with US Commerce Secretary Howard Lutnick, during which both sides agreed to continue negotiations “actively”.
“We are trying to agree on a package of measures ranging from expanded trade, non-tariff barriers and cooperation on key economic security issues,” Akazawa said at a press conference.
He emphasised the need for trust and perseverance in the negotiations, stating: “The two countries must garner trust through sincere dialogue, and reach common ground step by step. Through such a process, my job as negotiator is to agree on a full package as soon as possible.”
Trump on Monday began notifying trade partners of the steep US tariff hikes, but later signalled a willingness to delay implementation if countries presented acceptable proposals. He also signed an executive order deferring the tariffs until 1 August.
Akazawa stressed that Japan was not working towards any specific deadline, including 1 August, and underlined that Japan would not sacrifice its agriculture sector for the sake of reaching an early agreement.
He made clear that protecting Japan’s automobile industry, central to the country’s export-driven economy and now facing 25% tariffs, was a top priority.
“There’s no point striking a deal with the US without an agreement on automobile tariffs,” he said.
The uncertainty surrounding the tariffs pushed the dollar to a two-week high of 146.44 yen, as markets scaled back expectations of a hawkish outlook from the Bank of Japan (BOJ) at its upcoming policy report on 31 July—an assessment that would have paved the way for an interest rate hike later this year.
“If the new deadline is set on August 1, the BOJ probably won’t be able to say much at the upcoming report in July,” said Takeshi Ishida, a strategist at Kansai Mirai Bank. “Market expectations of a near-term rate hike will be rolled back.”
Meanwhile, Japan’s Finance Minister, Katsunobu Kato, told reporters he currently had no plans to hold talks on exchange rate issues with US Treasury Secretary Scott Bessent.
Japan failed to secure a deal with the US before the 9 July expiration of Trump’s temporary suspension of his “reciprocal” tariffs, as Tokyo focused its efforts on eliminating automobile levies.
With an upper house election looming on 20 July, Prime Minister Shigeru Ishiba has vowed that Japan will not make “easy concessions” merely to conclude a quick agreement with Washington.
Recent media polls suggest Ishiba’s ruling coalition may struggle to retain a majority in the upper house, a scenario analysts warn could further complicate trade negotiations.
The tariffs come at a precarious time for Japan’s economy, which contracted in the first quarter of the year. The additional strain from US tariffs could push the country closer to recession.
“There’s now a chance Japan could slide into recession,” warned Yoshiki Shinke, chief economist at the Dai-ichi Life Research Institute, who estimates that the 25% tariffs could shave 0.7 percentage point off Japan’s annual economic growth.
