Japan-U.S. talks hit a wall, Tokyo not backing down

Japan-U.S. talks hit a wall, Tokyo not backing down

We’ve been talking about this for some time now, Lynn, that uh Japan is also playing a hard ball. Indeed. Uh both sides staying pretty defiant here. These talks have been pretty difficult despite what many had anticipated or forecasted when these negotiations first began 3 months. Keeping in mind that Japan was one of the first countries that was designated with that priority status in terms of negotiations as well. And last week we were hearing that perhaps Rios Akazawa would go to Washington again for what would be the eighth round of talks. That did not happen. Instead, we know that he had two phone conversations with the commerce secretary Howard Lutnik. once on Thursday for 45 minutes and another on Saturday for 1 hour as well. And we’ve been hearing from the prime minister basically every day given that he is out and about. We are in that campaign period before that allimportant upper house elections as well. And on television yesterday, the prime minister was again asked about these talks and again keeping quietly defined here saying that uh Tokyo will not compromise easily and that even allies have to say what they have to say to each other. I mean it’s worth keeping in mind as I said that the domestic politics is a big component here. We’ve heard from Fred Newman earlier talking about this from HSBC also last week as well. Uh we heard from Scott Besson when he was asked about how these trade talks were going and he said well we’ve got to keep in mind here that there is an election on foot. So perhaps we will see some more of that momentum coming back into play post July 20 as well. But I think a lot will depend on as well how these results end up going and whether or not the LDP can hold on to that majority.
Indeed. Yeah. We’re less than two weeks away from that July 20th upper house election. So I mean there are better than even odds that there will be no trade deal or framework deal between the US and China by or even before uh July the 9th. How are investors uh viewing this?
When we look at the market reaction particularly I think last week when we saw the US president criticizing singling out Japan three days in a row. Uh on the whole the NIK225 index was only down 8/10en of a percent. Which is mild when you consider how volatile this index can be and we’ve seen some of that post so-called liberation day and so forth. Some of the investors that I’ve been speaking to out of Tokyo take the view here that there is still the theatrics being played out here that ultimately they see that there will be some sort of a negotiated deal. The question is around the timing. However, we did hear from Kurt Campbell who is the former deputy secretary of state where he highlighted that there was a sense of dread and concern coming from countries like Japan as countries wait for these potential letters that are coming. Let’s watch. If you take Japan for instance, at the same time that the president and his team are driving a very hard bargain with respect to autos and uh insisting on more Japanese investment in the United States, even though Japan is one of the top two or three investors already, they’re also putting enormous pressure on Japan on defense spending, on more support for American forces based in uh Japan. I would say at a general level, this is just not how we’ve traditionally treated an ally. And so right now, the country that’s in the worst shape is Japan. So Mr. Campbell taking the view here that Japan is in that sort of worstc case scenario. Sherry and keep in mind that we did hear the US president yes last week floating out these other numbers 30 35% or some other number but certainly when you look at the market reaction the market has not been pricing in any kind of expectation of that elevated tariff beyond the snapback rate of 24.

Japan-U.S. talks hit a wall but Tokyo is not backing down. CNBC’s Lin Lin saying the Japanese government appears to be standing firm ahead of the upcoming Upper House election on July 20, Prime Minister Shigeru Ishiba insisting that his administration will not compromise easily.