Another Trump Trade Fiasco, This Time With Japan

-edited

Hopes for a trade deal between the US and Japan have faded. Autos and Agriculture are the sticking points.

Japan Trade Deal Hopes Fade

It's not just China. No one should be surprised that Hopes of a Trade Deal With Japan Have Faded.

“It will be a very tough negotiation,” said one of the officials, who spoke on condition of anonymity due to the sensitivity of the matter.

“If there is to be an ‘agreement’ we need to have something we can formally announce, which is tough,” said another Japanese official, adding that it will be difficult to agree on a deal in September unless Washington makes more concessions.

Four Hangups

  1. Washington is targeting Japan’s auto exports, which account for about two-thirds of the U.S. trade deficit with Japan at roughly 7 trillion yen ($65.82 billion) a year.
  2. Trump wants to open up Japan’s market for agriculture goods and beef. One demand Washington is making is for Tokyo to cut tariffs on U.S. beef and pork imports.
  3. Japan wants the United States to cut tariffs on imports of car parts and industrial goods - something Washington is reluctant to.
  4. U.S. automakers are also want to include a provision prohibiting both countries from engaging in currency manipulation. Japanese officials are opposed to adding such language in the deal, for fear of having their hands tied in battling any unwelcome yen spike that hurts the country’s exports.

Anything Else?

Just an observation that Trump does not trust Japan and Japan does not trust Trump.

Question of Trust

  • There is no reason for any country to trust Trump.
  • To be fair, there is no particular reason for Trump to trust either Japan or China.

Big Picture

It's important to stand back and look at the big picture.

If indeed Japan and China are subsidizing exports, that is to the benefit of US consumers.

We should welcome subsidies.

Remember TPP

Please recall that Trump cancelled TPP, the Trans-Pacific Trade Partnership, a trade agreement with Australia, Canada, Japan, Malaysia, Mexico, Peru, the United States, and Vietnam, now minus the US.

In that deal, Japan significantly lowered tariffs on agriculture for the TPP participants.

Australia and Canada were the primary beneficiaries.

It will now take huge tariff cuts by Japan just for the US to break even with where we could have been relative to Australia and Canada.

In return, Japan wants a further reduction in US auto tariffs.

Trump in a Box

Trump put himself in a box.

He has no winnable solution other than backing down.

But that is contradictory to his ridiculous message "Trade wars are good and easy to win."

Mike "Mish" Shedlock

Comments (13)
No. 1-8
Tengen
Tengen

I can't fault Japan at all for hangups #2 and #4.

Japan's food is great, they have high quality meat already. It's expensive, but the meat portions are much smaller there anyway. Why do they need hormone-laden US meat? As long as they have access to rice from SE Asia and they don't overfish, they're fine indefinitely. The last thing Japan needs is an obesity crisis from a diet of frankenfood.

Anyone in their right mind would avoid language of currency manipulation. Everyone is openly doing it and the label can only be used as a weapon to bludgeon opponents. We already screwed them once with the Plaza Accord, why would they want to experience that again?

Realist
Realist

Yep. Trump had a very good TPP deal handed to him on a silver platter. It would have improved US/Japan trade (plus US trade with all the other participants), and more importantly, it would have provided a multi-country bloc to put leverage on China to make concessions on trade (which was TPPs primary reason for being formed). Trump was too arrogant to accept a good deal that had taken years of hard work to negotiate because he thought he could do better.

Trump has now isolated the US. He is struggling to make a deal with Japan. He is going backwards on China. China is signing trade agreements with everyone else, which reduces any leverage the US had through TPP.

He is confidently predicting he can make Europe do anything he wants simply by putting more tariffs on their auto exports. Yet he hasn’t been able to sign any trade agreement with Europe.

He still hasn’t completed the new NAFTA agreement even though it is 99% the same as the previous agreement.

He just cancelled his upcoming meetings with Denmark because they won’t sell him Greenland!

Almost 3 years into his presidency and the only thing he has accomplished on trade is to move the US backwards and put the country in a worse position. Assuming he gets re-elected, I suspect that the US will continue to move backwards on trade.

Worst President ever.

Aaaal
Aaaal

LOL, Trump-in-the-box.

Ebowalker
Ebowalker

Governments fail at everything they try to do. It doesnt matter if a Democrat, Republican, or dictator.

Augustthegreat
Augustthegreat

In a box is the only right place for an idiot like Trump