Experts assess impact of US-Japan trade dealーNHK WORLD-JAPAN NEWS
Staying with the trade agreement, Yuko Fukushima from a business desk has been going over the terms and conditions. So, Yuko, tell us about what’s involved. Sure. Well, the White House has published a fact sheet on what it calls a landmark economic agreement with Japan. The document includes what the US describes as the largest foreign investment commitment ever. And the headline number? Well, Japan will invest $550 billion to rebuild and expand core American industries. He says President Trump will direct the funds to revitalize the strategic industrial base in the US. Now, this includes energy, semiconductors, critical minerals, pharmaceuticals, and ship building ships for both commerce and defense. The document says the US will retain 90% of the profits from this investment. The White House fact sheet also explains how the US will be given greater access to Japanese markets. It says Japan will boost imports of US rice by 75% effective immediately. In addition, Japan will purchase $8 billion in other US goods including corn, soybeans, fertilizer, bioethanol, and sustainable aviation fuel. And speaking of fuel, there will also be a major expansion of US energy exports to Japan. The document mentions that the two nations are exploring a new long-term agreement for Alaskan liqufied natural gas. On the defense front, Japan will purchase 100 Boeing aircraft. And it doesn’t stop there. Billions more will be spent each year on US defense equipment to enhance alliance security in the Indo-Pacific. In the auto sector, the White House says Japan will lift longstanding restrictions on cars and trucks made in America. Tokyo has also agreed to approve US automotive standards for the first time. And last but not least, tariffs. Imports from Japan will be subject to a baseline 15% tariff rate. Now all that got another thumbs up from the stock market in Japan took his benchmark index added to gains posted on Wednesday after investors heard about the conclusion of the deal. The Nikk25 closed at another record high for the year adding one and a half% on Thursday. Investors are hoping the US will conclude deals with other countries too. Well, is that optimism justified? I talked to David Bowling, a former trade negotiator under the first Trump administration at the USR. He says although on the surface this deal is a big win for Trump, Japan was not the only side making concessions. I think for Japan the key was the automobiles tariff. And a 25% automobiles tariff is very difficult for Japan to swallow. And they were able to negotiate that down to 15%. If you’d asked me last week, he just seemed really committed to sticking to a 25% automobiles tariff. And to me, that was the biggest surprise that he came down on it. And um you know, I think Japan was able to provide a lot of reasons to argue you should come down and he did. But that was a pretty big concession on the part of Trump. Looking at the fact sheet that was released by the White House today, it it looked like it was not so fair on the Japanese side. Well, I think if you look a little bit more closely, some of the concessions that Japan gave or made were not that big of a deal in my view. Uh now there’s I’ll give an a couple examples. Automobile safety standards. Japan agreed to accept US automobile safety standards. I think that’s good. But do we think now that Japan has done that that US automobiles are going to suddenly flood into Japan? That’s not going to happen. And that’s because the US automo bill makers are not that interested in the Japanese market because it’s a declining market. And if you look at the rice concession, what they’re doing is they’re taking the current quota system and they’re not expanding it. They’re just reallocating some of that to the United States. So that didn’t really change. Economists in Japan, meanwhile, are busy calculating how the trade deal will impact the country’s economy. Kugo Shoa, senior economist at Da Institute of Research, estimates the tariff could reduce Japan’s GDP by 1.1% in real terms this year. He says the 15% tariff on cars, Japan’s main export to the US, is not as bad as projected, but is still high. Q Takahide at Namuda Research Institute says the deal could trim GDP by 0.55% over the coming year. He believes Washington’s America first policy could lead Japanese companies to reconsider investments in the US. Well, Prime Minister Sheibba says Japan has protected what needs to be protected, but it can’t be denied US import duties are a lot higher than before Trump took office. Japanese people and businesses now have to figure out how to deal with this new reality.
Both countries claimed wins as Japan pledged billions in US investment and Trump slashed import duties on Japanese cars. But tariffs could still hurt Japan’s economy. #business #usa #donaldtrump #economy
More stories on business and technology: https://www3.nhk.or.jp/nhkworld/en/news/tags/60/
Please subscribe HERE: http://www.youtube.com/channel/UCSPEjw8F2nQDtmUKPFNF7_A?sub_confirmation=1