Japan, US start tariff talks amid reports on cars, rare Earths

Japan and the US have begun the latest round of trade negotiations, with media reports suggesting Tokyo’s delegation is trying to win a reprieve from the tariffs by pledging to make more cars in the US and enhancing cooperation on rare earths.Japan’s top trade negotiator Ryosei Akazawa met with US Commerce Secretary Howard Lutnick on Thursday in Washington, exchanging specifics on non-tariff barriers, expanding trade and cooperating on economic security, Japan’s cabinet secretariat said in a release. Akazawa is expected to return to Japan Sunday after finishing what could be the last round of cabinet level discussions before Group of Seven leaders convene for a summit in Canada later this month.
Expectations are mounting that Japanese Prime Minister Shigeru Ishiba and US President Donald Trump, who held two phone meetings recently, may announce a deal when they meet on the sidelines of the summit.
Akazawa strongly urged Lutnick to review the US tariffs, maintaining Tokyo’s stance since Trump hit Japan with a 25% tariff on cars and car parts. As with other nations, Japan saw a doubling in the steel and aluminum levy to 50% this week, and a 10% across-the-board levy will rise to 24% in early July barring a deal.Japan has proposed a mechanism to the US since the early stage of the negotiations in April that the 25% duty on cars would shrink in proportion to rising output at Japan’s plants in the US, as well as higher exports of those vehicles, the Asahi newspaper reported on Friday citing unnamed government officials. Japan continues to seek a full removal of the US tariffs, but it also sees lower rates as an option, the Asahi newspaper reported.

The auto tariffs are already delivering a blow to the Japanese economy as an April drop in car exports to the US raises the risk of a technical recession following a contraction in the first quarter.

Rare earths appear to be among the discussion topics as Akazawa told reporters following the previous round of trade talks that the mineral is “undoubtedly a critical theme for economic security.”

Japan plans to make a proposal to the Trump administration to enhance cooperation on rare earths and liquefied natural gas in order to help the US deal with frictions over those items against China, the Nikkei newspaper reported Thursday citing an unnamed person involved in the negotiations. Trump and Chinese President Xi Jinping on Thursday agreed to further trade talks aimed at resolving disputes over tariffs and supplies of rare earth minerals.

In 2010, China’s export curbs on rare earths hit Japan amid a political dispute. After that, Japan’s industry and government made a concerted push to diversify sources of supply, investing in Australia and elsewhere to reduce some of their reliance on China.