Japan-US Trade Talks Intensify to Avoid 24% Tariff

The Japanese government has confirmed that discussions with the United States regarding a potential trade agreement are ongoing. This development comes as Japan seeks to avoid a 24% tariff rate that is set to take effect in July. The negotiations are part of a broader effort by Japan to secure exemptions from the tariffs imposed by the United States, which have been a contentious issue in recent months.

Ryosei Akazawa, Japan’s top tariff negotiator, and US Commerce Secretary Howard Lutnick held a 30-minute phone call on Saturday. The Japanese government described the talks on Saturday similarly to Akazawa’s Friday statement, terming the conversation as “very in-depth” and that the two parties explored the possibility of reaching an agreement that would benefit both countries. Akazawa also had in-person talks on Friday with US Commerce Secretary Howard Lutnick for around 70 minutes and with Treasury Secretary Scott Bessent for 45 minutes. The country is still in for a 24% tariff rate on their exports starting in July unless it can secure a deal with the US. Tokyo is also pushing to shield its auto industry from a separate 25% US levy.

In earlier talks, Japan offered to increase imports of US agricultural goods and review its “non-tariff trade barriers” to American car sales to respond to the concerns of the Trump administration. In addition, the government is mulling to collaborate with the US to secure supply chains of rare earth magnets and semiconductors. Often, rare earth magnets manufacture electric vehicle motors and missile devices. Regarding neodymium magnets, China produces more than 80%, while Japan accounts for only about 15%. The US has been scrambling for ways to deal with China’s dominance and restrictions on rare earths exports, and Japan could very well be the solution the country has been looking for.

One of the key issues in these negotiations is the acquisition of U.S. Steel by Nippon Steel. The Japanese steelmaker has announced its intention to acquire all common shares in U.S. Steel, a move that has been approved by the U.S. administration. This acquisition is seen as a strategic partnership that could lead to significant investments in the steelmaking industry in the United States. The approval of this deal is expected to pave the way for further economic cooperation between the two countries. The merger agreement deadline is June 18, though the companies’ statement did not specify exactly when it will close.

The negotiations come at a critical time, as the U.S. administration has indicated that it may impose unilateral tariff rates on trading partners. The Japanese government is hoping that these discussions will result in a favorable outcome that would exempt Japan from these tariffs. The talks are also seen as a way to address broader trade issues between the two countries, including market access and intellectual property rights. The Japanese government's confirmation of fresh trade talks with the United States underscores the importance of these negotiations for both countries. As Japan seeks to avoid higher tariffs and secure a favorable trade agreement, the outcome of these discussions will have significant implications for the economic relationship between the two nations. The talks are expected to continue in the coming weeks, with both sides working towards a mutually beneficial agreement.