Japan said it is ready to make a better deal with U.S. President Donald Trump on trade tariffs to remove all the job and remove 25% of Japanese auto imports at full force, rather than risking a domestic political rebound.
Japan, the largest outside investor in the United States and Asia's closest ally, is eager to avoid any relationship with Washington and any relationship with Prime Minister Shigeru Ishiba, initially prioritizing priorities for negotiating with other countries before other countries.
But pressure from business leaders and members of Islam's own Liberal Democratic Party rejects any deals that put the auto industry at risk or threatens domestic farmers, forcing him to recalculate him, officials and analysts said.
“While Japan is very eager to be the first country to negotiate tariffs with Washington, this sense of urgency has now changed, with the focus on ensuring Japan gets a lot of deals,” said a Tokyo official who knew the negotiations directly.
Officials say it is unlikely to reach an agreement before the Upper House of Lords of Japan, which expires in late July and is expected to be difficult for Ishiba's highly unpopular administration.
Japanese negotiators led by Economic Secretary Ryosei Akazawa held two meetings with Trump administration officials. Plan one-third of the plan next week. Tokyo Treasury Secretary Katsunobu Kato also hopes to hold talks with U.S. Treasury Secretary Scott Bessent at the G7 meeting in Canada next week.
Japan's first-time posts still lifted all new U.S. tariffs, including a 25% tax on automobile, steel and aluminum imports, as well as a "mutual" tariff on other Japanese goods, which has since been temporarily reduced to a 10% "baseline" level.
Although the impact of U.S. tariffs on operating profits of major Japanese auto companies is expected to be around 2TN ($13.7 billion) for the fiscal year ending next March, according to estimates by companies and analysts. Japan's economy shrank for the first time in the first quarter.
What the second Japanese official knows about the negotiations: "Auto and auto parts are the largest export sectors from Japan to the United States." "This means this U.S.-Japan negotiations have to deal with this automatic tariff issue. If we can't make progress in this area, then I don't think we can reach any consensus."
Tokyo’s strongest offer for Washington may be a larger purchase of U.S. agricultural products, a larger market acquisition of U.S. cars, and investment in Alaska’s LNG pipeline projects, officials said.
But with the July House election looming, Isbon told parliament that he would not sacrifice the domestic agricultural industry (also a big employer) to win the lower tariffs on cars.
“Japan’s position has become stronger. Shigeru Ishiba is fighting for his political life and political parties. He can’t just roll over. Autos accounts for 81% of Japan’s trade surplus with the United States in 2024. If PM Ishiba fails to get tariffs on the auto sector, he will be heading toward Nicholas Smith Stranta Smith of Smith Smith, Cls, Cls of Smith trangie to of Dottanceor sector in Japan.
Experts say it is not clear how much leverage Japan has to the White House. Tokyo depends on Washington's security and reported a $63 billion trade surplus with U.S. goods in the 2024-2025 fiscal year. The Trump administration accused Japan of deliberately weakening the yen, further complicating negotiations.
Ishiba, led by a fragile coalition, fears that a one-sided trade will deepen the crisis against the dominant Natural Party. He gambled in the general election in October, causing the party to lose a majority in the House of Commons for the first time since 2009.
The House of Lords election in July could cause further damage, especially if the Agriculture Hall believes it has been betrayed by a deal that opened for the floodgates of U.S. agricultural imports.
An early proposal from Japan was to link the level of investment in the U.S. by Japanese companies that cut percentages of tax cuts, according to officials.
The U.S. Treasury Department and the U.S. Trade Representative did not immediately respond to requests for comment.
"Japan, in principle, does not want a deal that looks like a speed hammer, but at the same time, it cannot rely on the idea of the US patience with a complex agreement," the official said.
Stephen Nagy, a professor of political and international studies at Tokyo International Christian University, said Isbon's strategy is based on the idea that the United States places its security partnerships on tariffs.
"I think Japan will realize Trump's promise to meet the benchmark for tariffs," Najib said. "No matter what it does or says, Japan can't get rid of that."