President Trump Announces Trade Agreement With Japan

President Trump Announces Trade Agreement With Japan

[CC may contain inaccuracies] President Trump says he has reached a
trade deal with Japan, will be setting tariffs at 15% and see Washington’s major
Asian ally invest $550 billion in the U.S..
I just signed the largest trade deal in history, I think maybe the largest deal
in history with Japan. We worked on it long and hard, and it’s
a great deal for everybody. I always say it has to be great for
everybody. It’s a great deal a lot different from
the deals in the past, I can tell you that.
Shery, I’ll start with you. This seemed to be catching the market a
bit by surprise. How positive is this news?
You know, we have seen the Japanese yen gain ground and reverse earlier losses.
We’re seeing JGB yields rising and the obviously stocks you mentioned some of
those automakers. You mentioned Subaru, for example.
The has more than 70% of its global sales going to the United States.
We had Mazda as well. Toyota also seeing its best day since
August of last year. So markets are pretty impressed with the
deal so far, but the details are still pretty scarce.
What we’ve heard from President Trump, as we heard from him earlier, is that
this would be a historic deal. What do we know so far that it will be
50% on Japanese goods going into the United States?
Domestic media, NHK reporting that that will include 50% tariffs on Japanese
autos that would be coming down from 25%.
Those 25% tariffs were expected to have a 9 billion impact on major Japanese
carmakers. So that’s a sigh of relief if we
actually do get that confirmed. Prime Minister Ishiba coming out earlier
today saying that even he needs to see the details of these agreements.
So we’re still watching out for that. We’re also watching what happens to
Rice, because, of course, that’s a very sensitive and symbolic sector here in
Japan. And NHK also reporting that Japan is set
to increase the import ratio of U.S. rice, not necessarily talking about
tariffs because, remember, if you bring it down, the tariff rate for rice, what
is the competitive advantage of the US? Could be a big question so far.
We know that, for example, last year, U.S.
imports of rice were about 40% of total imports into Japan.
So we’ll be watching what this actually means when it comes to this very
sensitive sector for the Japanese public.
We also have some details about a $550 billion investment into the United
States. And we heard from President Trump that
that will include a joint venture with Japan for the Alaska LNG project.
Sherry, how does he sell this now in Japan domestically as a win?
It is going to be a net positive for the Japanese economy.
I talked about the impact on the auto sector, and the auto issue was a big one
because when it comes to the Japanese trade surplus against the US, 80% of
that included cars. So including cars in this deal, that
could mean bringing us cars into the US, although that could be a concession.
It could also be just good news for the broader economy.
Of course, Prime Minister Ishiba, as you said, needs to sell this because he’s
also just suffered the historic defeat when it comes to the Upper House
election over the weekend. And he is now preparing to have
discussions with opposition parties about other key issues domestically,
like bringing down the sales tax at the moment.
Whether that’s a temporary or permanent reduction, of course, is a key question.
Will he need to make more concessions? Cost of living was a big issue.
Rice is a big part of that. We will wait for details when it comes
to those rice imports from the US. But we know that rice prices are still
higher, about 60% already from last year.
So what the implications are for the broader Japanese economy?
That’s how Prime Minister Ishiba will try to sell this to the domestic public.
But of course, given his historic defeat, I had heard from my colleagues,
for example, Paul Jackson saying that this could be the leverage that the
prime minister has to keep his job because his vow to stay in power,
despite the fact that he suffered this big defeat for his ruling LDP.
Now that there is a trade deal, what will happen to the prime minister is a
key question. The last three LDP leaders have lost the
upper house election, have had to quit in the next two months.

President Donald Trump says he’s reached a trade deal with Japan that will set tariffs on Japanese imports at 15% and see Japan invest $550 billion into the US. Bloomberg’s Shery Ahn reports from Tokyo on the latest.
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