U.S. President Donald Trump and Japanese Prime Minister Shinzo Abe agreed to start trade talks in an arrangement that, for now, secures Japanese automakers from more tariffs, seen as a significant threat to the export-dependent economy.
The two countries stated in a joint statement the talks “will respect positions of the other government”, drawing lines on autos and Japan’s agriculture segment.
Trump has made clear he is not happy with Japan’s $69 billion trade surplus with the United States – almost two-thirds of it from auto exports – and wants a two-way agreement to address it.
Japan pushed back on a straight bilateral Free Trade Agreement (FTA) that the US had sought. The recent framework seemed designed to permit both parties to save face: Abe avoids the worst-case scene of an imminent 25 percent tariff on vehicles, where as Trump claims victory for getting Japan to a two-way negotiating table.
“This was something that, for various reasons over the years, Japan was unwilling to do and now they are willing to do,” Trump stated at a summit with Abe in New York on the sidelines of the U.N. General Assembly.
“We’re going to have a really great relationship, better than ever before on trade,” he added.
Wednesday’s statement stated a deal governing the auto sector would be written to increase production and jobs in the United States.
Tokyo had stressed that Trump could demand a decrease in auto imports from Japan or that he could enforce steep tariffs on such imports on national security grounds.
While economists observed the agreement as a positive result for Japan for now, they noted what would eventually be agreed upon was still not known.
