U.S. focus on auto trade gap is sticking point for Japan deal

A strong U.S. focus on its auto trade deficit with Japan is a key factor keeping the two nations from reaching a deal, according to a Japanese opposition party leader who met with Prime Minister Shigeru Ishiba to discuss the tariff negotiations.
Yoshihiko Noda, who heads the Constitutional Democratic Party of Japan, said on Thursday that he asked Ishiba what was preventing the two sides from finding common ground in the talks that have continued for around two months.
"He didn't give a clear explanation, but it seems that the U.S. has the strongest interest in the auto trade deficit,' Noda told reporters. "Various ideas were probably proposed, but there are differences in thinking regarding autos. So, he said a general consensus has yet to be reached.'
Ishiba briefed Noda and other party leaders about the latest developments in the bilateral trade negotiations. The prime minister and U.S. President Donald Trump met on the sidelines of the Group of Seven summit in Canada earlier this week, but failed to come to an agreement.
Japan's trade surplus with the U.S. last year stood at ¥8.6 trillion ($59.3 billion), the fifth largest on record. Roughly 82% of the gap was due to Japan's surplus in cars and auto parts. The differential put the nation in Trump's crosshairs as he kicked off a global campaign to rebalance U.S. trade deficits using tariffs.
Trump has imposed levies of 25% on cars and related parts. The auto duties are a particular concern for Japan as the car sector is crucial to its economy, employing some 5.6 million people, about 8.3% of the country's work force, and generating around 10% of gross domestic product, according to the Japan Automobile Manufacturers Association.
The tariffs are raising the risk that Japan's economy enters a technical recession after contracting in the first quarter of the year, ahead of the bulk of the measures. Exports to the U.S. fell 11% in May, with shipments of autos slumping about 25%. Japan's trade surplus with the U.S. in the month stood at ¥451.7 billion, with 93% of that due to autos and related parts, according to the Finance Ministry.
Thursday's gathering among party leaders comes ahead of an Upper House election in July. The tariff negotiations loom large not only for the economy, but also Ishiba's public standing.
Prime Minister Shigeru Ishiba meets with opposition party leaders Thursday to brief them about the latest developments in the tariff talks with the United States. |
Jiji
Nippon Ishin no Kai co-leader Seiji Maehara also cited the prime minister as saying that autos are the biggest point of disagreement between the two nations.
"He didn't mention the details,' Maehara said after the meeting. "But I felt that the biggest difference exists in automobiles. Japan is requesting a reduction in automobile tariffs, but I suspect that Trump may not have agreed to that.'
Ishiba emphasized in the conference that he will make sure companies in the auto sector are getting ample support for loans, while seeking cooperation beyond party lines to secure Japan's interest in the trade talks, Maehara said.
It's also unclear what the U.S. will decide regarding its July 9 trade deadline, when so-called reciprocal tariffs are poised to return to their original, higher levels, Noda said, citing his exchange with Ishiba.
For Japan, that will mean a bump in across-the-board tariffs to 24% from 10%. In addition to the levies on cars and auto parts, the nation is already facing 50% tariffs on steel and aluminum.
Japan's top trade negotiator, Ryosei Akazawa, is expected to continue discussions with U.S. counterparts including Treasury Secretary Scott Bessent. The two sides have held six rounds of talks in Washington so far. Ishiba and Trump also had three phone conversations on tariffs prior to their in-person meeting in Canada.
Maehara, a former foreign minister, voiced support for Ishiba's ongoing efforts.
"In the end, I believe that President Trump will make the final decision,' Maehara said. "We ask the Japanese government to continue to build the content of the package without compromising Japan's interests, and we won't simply say that it is unacceptable because an agreement wasn't reached this time.'

Try Our AI Features

Explore what Daily8 AI can do for you:

Learn with AIFact CheckingText to SpeechAI Summary

Related Articles

Nikkei Asia

an hour ago

• Nikkei Asia

Trump's hollowed NSC could hurt his China trip, experts say

WASHINGTON -- As the White House begins preparations for U.S. President Donald Trump's possible trip to Beijing, a staff reduction at the National Security Council that eliminated experienced advisers could end up backfiring, experts say. Trump and Chinese President Xi Jinping extended invitations to each other in a phone call early this month, when the two leaders discussed tariffs to bring down trade tensions. Preliminary preparations for Trump's trip got underway after the call.

Japan Times

4 hours ago

• Japan Times

Masayoshi Son pitches $1 trillion U.S. AI hub to TSMC and Trump team

SoftBank Group founder Masayoshi Son is seeking to team up with Taiwan Semiconductor Manufacturing Co. to realize what could be his biggest bet yet — a trillion-dollar industrial complex in Arizona to build robots and artificial intelligence. Son envisions a version of the vast manufacturing hub of China's Shenzhen that would bring back high-tech manufacturing to the U.S., according to people familiar with the billionaire's thinking. The park may comprise production lines for AI-powered industrial robots, they said, asking not to be named as the plan remains private. SoftBank officials are keen to have the Taiwanese maker of Nvidia's advanced AI chips play a prominent role in the project, although it's not clear what part Son sees for TSMC, which already plans to invest $165 billion in the U.S. and has started mass production at its first Arizona factory. Nor is it clear that TSMC would be interested. A person familiar with the chipmaker's thinking said that SoftBank's project has no bearing on TSMC's plans in Phoenix. Codenamed "Project Crystal Land,' the Arizona complex represents the 67-year-old SoftBank chief's most ambitious attempt in a career that's spanned numerous bet-the-house bids, thousands-fold-returns and billions of dollars in losses. Son, who's often expressed disappointment in his own legacy, has repeatedly said he means to do everything he can to hurry AI development. SoftBank officials have spoken with U.S. federal and state government officials to discuss possible tax breaks for companies building factories or otherwise investing in the industrial park, including talks with U.S. Secretary of Commerce Howard Lutnick, the people said. The Japanese billionaire is also personally sounding out interest among an array of tech companies, they said. The project has been floated to executives at South Korea's Samsung Electronics, they said. Shares of SoftBank rose 2.7% Friday. TSMC's stock price rose 1.9%, while Samsung's gained 0.5%. Representatives of SoftBank, TSMC and Samsung declined to comment. A Commerce Department spokesperson did not immediately respond to a request for comment. SoftBank's attempts to get businesses investing in a U.S. industrial park follow signs that its campaign alongside ChatGPT-maker OpenAI to raise hundreds of billions of dollars for U.S. data centers is moving slower than initially expected. Crystal Land would need to address crucial details, such as whether there's demand and funding on par with its grandiose scale, to become reality. Son has pulled together a list of SoftBank Vision Fund portfolio companies that might take part in the Arizona manufacturing hub, the people said. SoftBank-backed startups working on robotics and automation technologies — such as Agile Robots — may set up production facilities at the industrial complex, they said. The plans are preliminary and feasibility hinges on support from the White House and state officials. While the cost of the project as envisioned by Son may require as much as $1 trillion to execute — a sum previously reported by the Nikkei — the actual scale depends on interest from big technology companies. If successful, Son has floated building multiple cutting-edge industrial parks across the U.S. SoftBank is exploring the Arizona project as it also moves forward on plans to invest as much as $30 billion into OpenAI and plans a $6.5 billion acquisition of Ampere Computing. It's also seeding money into the Stargate venture with OpenAI, Oracle and Abu Dhabi's MGX, although it aims to get the bulk of the money for building data centers around the world from outside investors. Those outlays come as SoftBank's cash stood at ¥3.4 trillion ($23 billion) at the end of March. The Tokyo-based company has since tapped its T-Mobile U.S. stake, selling roughly a quarter of what it held in March to raise $4.8 billion this month. SoftBank also has net assets valued at ¥25.7 trillion, of which chip designer Arm Holdings makes the single largest portion, allowing it to borrow billions more as needed. SoftBank is exploring project financing for Stargate data centers, a model that could be adapted to a big endeavor like Crystal Land. Common for large-scale infrastructure like oil or gas pipelines, the project finance template would allow the tech investor to raise funding on a project-by-project basis and require less money upfront. Son's restless search for growth has resulted in projects that proceed in fits and starts, making it difficult to gauge how committed he is to any one venture. The billionaire is often goaded by the desire to boost SoftBank's stock price and repay retail investors who've held onto the company's shares from before the dot-com boom and bust, people close to the SoftBank chief have said. Many investors have waited for decades for the stock to regain dot-com bubble levels — something it's flirted with only a few times since 2020. If Son's primary motivation is to clear the way for AI, it may be more cost-efficient to encourage partnerships that link manufacturing expertise with that of AI engineers and specialists in fields from medicine to robotics, and incubating smaller companies, according to Melissa Otto, head of research at Visible Alpha. But pouring cash into data centers may help lower the cost of developing AI applications and spur broader adoption, she said. "He's a long-term thinker, and he takes risks,' Otto said. "It's just too early to tell.'

The Mainichi

4 hours ago

• The Mainichi

Japan PM to visit Netherlands from Tuesday for NATO summit

TOKYO (Kyodo) -- Prime Minister Shigeru Ishiba will be in the Netherlands for three days from Tuesday to attend a NATO summit, the government said Friday, as Japan aims to deepen its partnership with the military alliance. It will be the fourth straight year that a sitting Japanese prime minister has participated in a NATO summit. Japan is not a NATO member but is one of the alliance's Indo-Pacific partners. Ishiba also plans to hold bilateral talks with leaders of NATO members and those of its partners while in the Hague for the summit, Chief Cabinet Secretary Yoshimasa Hayashi said. U.S. President Donald Trump is among the expected attendees at the two-day summit from Tuesday. "Given the severe security environment we face, and based on the shared view that the security of the Euro-Atlantic and that of the Indo-Pacific are inseparable, Japan, along with other partners from the region, will discuss how we can cooperate with NATO in concrete terms," Hayashi said. At a meeting in Tokyo in April, Ishiba and NATO Secretary General Mark Rutte underlined the need to strengthen the Japan-NATO partnership amid security threats from Russia and China and agreed to push for defense industry cooperation.