Although the U.S. acted quickly to establish a trade agreement with China, it has been much more challenging to do the same with close allies. The United States designated 18 major trading partners as negotiation priorities after President Trump announced on April 2 that nearly all imports would be subject to widespread “reciprocal” tariffs. However, little progress has been made with the others, with the exception of a swift agreement with the United Kingdom and a reduction in tariffs with China.
U.S. trade allies waiting for tariff relief after China truce
In negotiations with important allies like South Korea, Japan, and the European Union, automobile tariffs have become a major roadblock. These export-driven economies are particularly hard hit by the U.S.’s refusal to remove the 25% duty on imported cars thus far. Even though the United Kingdom was able to negotiate a lower auto tariff, the benefit only applies to the first 100,000 vehicles per year, which is far less than the amount that leading automakers export.
Toyota, Honda, and Nissan are among the Japanese automakers who have blamed the tariff regime for their underwhelming financial projections. This pressure has also been evident in Japan’s economic performance, as evidenced by recent data indicating a contraction in the first quarter. Under the leadership of chief trade negotiator Ryosei Akazawa, Japanese officials are still working to have the recently imposed tariffs on steel, cars, and other goods completely lifted.
South Korea is advocating for aid as well. During their recent meeting with U.S. counterparts on Jeju Island, trade officials emphasized the significance of the region’s auto parts industry, which sustains more than 300,000 jobs. EU member states, meanwhile, are demanding a more comprehensive agreement than the United Kingdom reached, claiming that the British deal’s narrow scope falls short of European standards.
Trump Administration stands on tariffs, Japan negotiating
The tariffs, according to the Trump administration, address non-tariff and regulatory barriers that U.S. exports face in addition to trade imbalances. The EU is subject to 20% tariffs, South Korea to 25%, and Japan to 24%. The baseline 10% tariff went to the United Kingdom, which has a trade surplus with the United States. The U.S. suspended the majority of these levies for ninety days—except those targeting steel and automobiles—which sparked a rush to bargain for better conditions.
Japan started negotiations right away and has been tactful, avoiding reprisals and pursuing diplomatic initiatives. According to experts, Japan is more receptive to compromise because of its defense alliances and economic dependence on the United States. Japanese officials, however, are still wary, particularly in light of the Trump administration’s disregard for a 2019 trade deal that had already reduced some tariffs on both sides.
According to trade analysts, Japan may make additional concessions, like boosting agricultural imports and collaborating on naval shipbuilding. Wider obstacles still exist, though, such as American demands to cut off relations with China and modify its currency policies. However, the United States is now focusing on the rest of Asia after reaching an agreement with China. “We’ve had very productive discussions with Japan,” said Treasury Secretary Scott Bessent, confirming the ongoing talks.
Featured Image Credit: Tom Fisk; Pexels: Thank You!
