Akazawa: No consensus yet between Japan-US on trade deal

Akazawa: No consensus yet between Japan-US on trade deal

Japanese officials remain hopeful about the possibility of a trade agreement between Japan and the United States, but there is no consensus yet on the terms of the deal. According to the Yomiuri newspaper [1], Economy Minister Ryosei Akazawa is set to return to Washington for more talks later this week, following which a decision will be made on a potential visit by Prime Minister Shigeru Ishiba.

The Japanese government has seen signs of progress in easing U.S. President Donald Trump's tariffs following repeated visits by Akazawa. The U.S. side has shown strong interest in Japan's proposals, but a final agreement remains elusive. The White House and the Japanese Prime Minister's Office have not yet responded to requests for comment outside business hours.

Japan, a major U.S. ally, faces a 24% tariff from July unless it can negotiate a bilateral deal. The country is also scrambling to find ways to exempt its automakers from 25% tariffs on automobiles, Japan's biggest industry. Some Japanese officials hope an agreement can be announced in time for President Trump's birthday on June 14.

Akazawa, after meeting with Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick, said on Friday that the two sides had agreed to accelerate the talks and hold another round ahead of the G7 summit, to be held from June 15 to 17 in Canada. However, he also noted that there would be no deal without U.S. concessions on tariffs, including on autos.

The diverging monetary policy direction between Japan and the U.S. is also expected to influence the trade negotiations. Japan's former top currency diplomat, Mitsuhiro Furusawa, expects the yen to rise gradually to around 135-140 against the U.S. dollar by year-end, citing the narrowing U.S.-Japan interest rate gap and the Federal Reserve's next move seen as an interest rate cut, while the Bank of Japan (BOJ) eyes further rate hikes [2].

Japan continues to seek reprieves from the U.S. tariffs while the UK reached a deal and China agreed upon a tariff truce with Trump. Japanese businesses increased capital investment at a faster pace in the first quarter of this year, as the Trump administration touted the coming tariff campaign that kicked off in March [3].

Despite the challenges, the Japanese government is stepping up its efforts to encourage corporate investment and mitigate the impact of the tariffs. Prime Minister Ishiba's government approved an emergency measure last week to help businesses and households deal with the impact of the tariffs.

References:

[1] Reuters. (2025, June 1). Japan PM Ishiba mulls Trump trade meeting before G7. Retrieved from https://www.reuters.com/business/japan-pm-ishiba-mulls-trump-trade-meeting-before-g7-says-yomiuri-newspaper-2025-06-01/

[2] Reuters. (2025, June 1). Japan's top FX diplomat expects yen to rise near 140 by year-end. Retrieved from https://www.tradingview.com/news/reuters.com,2025:newsml_L3N3S90E0:0-japan-s-ex-top-fx-diplomat-expects-yen-to-rise-near-140-by-year-end/

[3] Bloomberg. (2025, June 1). Japan's firms raised capital spending ahead of US tariff rollout. Retrieved from https://www.bloomberg.com/news/articles/2025-06-01/japan-s-firms-raised-capital-spending-ahead-of-us-tariff-rollout