Ishiba Takes a Hard Line as Japanese Auto and Tourism Industries Already Feel the Pain of Trump's Tariffs

TradingKey - As the impact of Trump’s tariffs on the real economy begins to surface, and more countries voice opposition to Trump’s tariff policies, Japan appears to be adopting a tougher stance in its trade negotiations with the U.S.

On Monday, April 21, Japanese Prime Minister Shigeru Ishiba stated that Japan would not yield to U.S. demands in reaching an agreement on tariff issues. He said, “If Japan concedes everything, we won’t be able to secure our national interest.”

According to Bloomberg, this is the strongest statement Ishiba has made since Trump launched his global trade war. 

Previously, markets believed that, given factors such as the U.S.-Japan alliance, Japan might soften its position toward the U.S. Japan had also previously indicated it would not take “retaliatory” measures against Trump’s tariffs.

At the same time, Ishiba said that he does not intend to terminate the trade agreement reached with the U.S. in 2019 but expressed concerns about the “inconsistencies” between that agreement and Trump’s latest automotive tariffs.

In October 2019, the U.S. and Japan reached a trade agreement to reduce bilateral tariffs on products such as agricultural goods. Although it did not explicitly cover automotive tariffs, the Abe Shinzo administration at the time had secured a commitment from Trump’s first-term administration not to impose tariffs under Section 232.

However, under the new tariff policies of Trump’s second-term administration, Japan’s auto industry has not received a tariff exemption and still faces a 25% tariff on automobiles. Ishiba stated that Japan would continue to communicate its position on this issue.

A Ministry of Finance survey published on the 22nd revealed that 10% of surveyed Japanese companies have already felt the impact of Trump’s tariffs on their businesses.

Some automakers said that certain orders have been cancelled, while one company reduced working hours for factory workers. 

Additionally, amid the recent sustained appreciation of the yen, tourism companies are concerned that a stronger yen could pressure inbound tourism.