US President Donald Trump announced on Tuesday the conclusion of a trade agreement, which he describes as “huge” with Japan. Here’s what you need to know about it.
Why conclude an agreement with Japan?
At the beginning of April, Donald Trump announced a long list of customs duties affecting several countries during what he called the “Liberation Day”. These were subsequently suspended time to negotiate and find agreements with the various countries.
PHOTO BRENDAN SMIALOWSKI, ARCHIVES AGENCE FRANCE-PRESSE
On April 2, US President Donald Trump announced a long list of customs duties affecting several countries around the world, including Japan, Canada, China, India and European Union countries.
The trade agreement concluded with Japan is part of this stride.
Time is running out to conclude agreements: customs duties would begin to apply from 1is August, unless the deadline is once again postponed.
Has Japan managed to lower customs duties?
With this agreement, customs duties on Japanese imports to the United States will be lowered to 15 %, a clear decrease compared to the 25 % that the Trump administration threatened to impose.
The 25 % surcharge specific to cars, which were already in force, will also be lowered to 15 %. This aspect is not commonplace: the automotive sector represents 8 % of jobs in Japan, and constituted almost 30 % of Japan exports last year to the United States.
ASSOCIATED PRESS
Japanese Prime Minister Shigeru Ishiba managed to reduce customs duties that will be applied to Japanese car exports to the United States.
The news was also welcomed as a relief in industry: the value of the actions of Japanese – but also European – automotive manufacturers leaps after the announcement.
The 50 % surcharge on steel and aluminum remain in force.
What concessions were made by Japan?
According to the American Treasury Secretary Scott Bessent, the Japanese had to be creative to be granted this drop in surcharge.
This was notably granted in exchange for investments of 550 billion in the United States, the details of which remain to be specified.
“The Japanese have proposed a very innovative solution, by providing funding, guarantees and mortgage credit to major projects here in the United States,” he said Scott Bessent on Tuesday at Bloomberg TV.
PHOTO KENT NISHIMURA, REUTERS
US Treasury Secretary Scott Bessent.
Will this money be invested in Japanese companies developing in the United States? Or directly in American projects? This remains nebulous, but it seems that money will be concentrated in the pharmaceutical and semiconductor industry sectors.
Japan will also open more to American automobile trade as well as American rice.
What does that mean for Canada and other countries?
Japan becomes the fifth country to have agreed with the United States, according to the Trump administration, after the Philippines, the United Kingdom, Indonesia and Vietnam.
Negotiations are expected to take place on Wednesday with the European Union, threatened with 30 %from surcharge.
Other countries would later come, but the American president did not specify which ones.
In a letter sent to Prime Minister Mark Carney, Donald Trump threatens to apply customs fees of 35 % to Canadian goods which are not affected by the free trade agreement.
Photo Nathan Denette, Canadian Press
Canadian Prime Minister Mark Carney tempers expectations with the United States by the end of the month.
The Minister of Commerce Canada-United States, Dominic Leblanc, is in Washington this week, but Carney warned that no agreement was concluded by the end of the month.
The United States will also start a third cycle of discussion on customs duties with China next week.
-with information from the France-Presse agency, the Associated Press, the Canadian Press and the New York Times