Japan ‘running circles around Trump’ over tariff negotiations: Expert

Our ally Japan out of favor but non ally India in favor in the rush to seal a deal with President Trump. New Delhi says quote a big good beautiful deal is on the cards while Tokyo says its focus is now on investments not tariffs with little to show for any trade deal with Washington. The fate of Japan’s prime minister Shigaru Ishiba and his minority government hangs in the balance as campaigning for the upper house election begins today. And that vote is set to take place in less than three weeks time. More than 500 candidates are vying for a place in the 248 member body. Mr. Ishba says that his goal is for the Liberal Democratic Party to retain a simple majority. This means it must secure at least 50 out of the 125 seats up for contention. A poor result would not immediately lead to change of government, though it could trigger a leadership change within the LDP or regrouping of the governing coalition. Observers say this will be a crucial vote for the prime minister after his ruling coalition lost its majority in the lower house of representatives last year. While dwindling wages expected to be on voters minds when they cast their ballots later this month, so is the issue of soaring rice prices, which has sparked complaints both at home and abroad. A US leader Donald Trump has accused Japan of not buying American rice while casting doubt on being able to reach a trade deal with the country. And Mr. Ishiba, however, has pledged to not make any concession on safety or other areas in tariff negotiations. All right, we are joined by William Pessek whose columnist and author. Thank you for joining us today, William. So, domestically, let’s start with that. Mr. Ishiba’s approval ratings have been inching up slowly, mostly due to measures taken to combat these soaring rice prices, and polls show that over 50% of Japanese are actually against increasing rice imports. So, how will Mr. Ishiba’s handling of these US tariff negotiations play into the upper house election on the 20th of this month. Well, I think you know it’s important to point out that Donald Trump when he came to office a second time he expected Japan to be a very easy mark. I think the reason was during his first term uh then Prime Minister Shinszo AB really did bow to Trump’s every whim. Um he you know he basically threw praise Trump’s way. He sat with him at the group of seven lunchroom when no one else would. He in many ways he gave Trump gifts. He was very very um obsequious towards Trump. Prime Minister Oshiba has been a very very different character. And I think that Prime Minister’s standpoint has been look you know we’ll negotiate a trade deal but what kinds of concessions is the US willing to make? I don’t think Trump expected Japan to ask that question. And what Japan is also saying is what is the rush? Japan concluded a free trade agreement with Japan with with the US rather in basically six years ago in 2019. Trump wants another one and I think Ashibasan is saying look you know we’ll negotiate but how about a year or two and I don’t think that Trump will expected him to respond in that that manner with the election coming up I think there’s a good argument that she’s actually his numbers are doing a little better because the Japanese have been pleasantly surprised by how I I’d say firm he’s been in the face of Trump’s bullying William we’ve been hearing a lot of rice talk from Mr. Trump. I wonder why the US leader is so fixated on rice in these trade talks, especially when Japan already imports American rice. I mean, they bought nearly what $300 million worth of American rice last year. Well, I mean, Trump doesn’t strike me as as a rice guy, which is which makes his fixation on rice very interesting. I mean, in many ways, rice is a sort of it’s a microcosm of the Japan US trade negoti trade relationship. Um, the Japanese don’t really eat foreign rice in general. It’s not a US thing. Japanese don’t really eat Thai rice either for the most part. They will in a pinch, but there have been scandals here in recent years where certain bento companies have been caught using American or Thai rice um in their food. The Japanese believe that their rice is different. Uh it’s more refined. It’s it’s just a better uh brand of rice, if you will. Uh and the Japanese are very proud of it. And they don’t necessarily like importing it. sort of it’s kind of like asking the French to drink American wine. They don’t really want to do it. We can discuss whether or not that’s wise or not, but I think for for Japan, they’re just not very keen on importing US rice. I think, you know, for it, it really is a kind of um it’s it’s a painless way to to, you know, plate Trump to import more US rice because the Japanese aren’t going to buy it anyway. And we know that Mr. Trump has cast doubt on a potential deal with Japan. Uh William, do do you think there is a real risk of talks breaking down or is this part of his high pressure tactics to extract, you know, last minute concessions from Japan? I think Japan is running circles around Trump and I think Japan realizes in many ways that Trump’s big focus is China. And you mentioned in the intro that the US and China have a have some sort of a trade agreement, but I would argue that the US and China have an agreement to talk about an agreement down the road. there’s a kind of framework to talk about a framework and I think Japan sees that happening and they realize that there’s scope for Japan to slowwalk this and that’s exactly what Japan is doing at some point when Trump is desperate for a significant trade agreement he might come to Japan and say look we’ll do a kind of you know moving the deck chairs around agreement that doesn’t change much just give me a win and Japan will say okay we’ll sign this deal which doesn’t change anything the first time the the US and Japan signed a Trump trade deal in 2019 Trump agreed to leave automobiles off the table, which when you think about a trade deal between the US and Japan, if you’re not talking about autos, what’s the point? So, in many ways, Japan is looking for another non-deal deal, and they’re hoping that Trump will be so desperate for a deal. You know, a deal with the UK, let’s be honest, doesn’t matter because the US is a trade surplus with the UK. So, that’s just a document you sign. Uh Vietnam does matter, but I’m not sure that this is changing the trade relationship fundamentally. Japan is a much bigger win for Trump and Ishiba knows it and that’s why he’s playing hard to get and I think he’s doing the right thing. Well, um, if the US does follow through with that new tariff of 30 35% from 24% after July 9th, what are their short and medium-term implications for uh, Japan’s GDP growth? And how do you expect the Bank of Japan to adjust its monetary policy stance? I mean, how constrained is the BOJ really in responding to this trade development? Well, you know, 30% 35% tariffs for Japan would be devastating because on top of that, you have 25% auto tariffs. Now, the auto industry is 10% of Japan’s GDP. It’s more than 8% of the workforce. So, you have 30 to 35% reciprocal tariff. You have a 25% auto tariff. This is a headwind that Japan didn’t need in 2025 when the economy is sort of flatlining as it is. And the question for the Bank of Japan, which has been raising interest rates for the last uh basically year and a half, is is your next move to cut rates or to raise rates? And I think that’s an open question. Complicating things is that Japan’s inflation rate is 3.7%, which is about double the BOJ’s target. So they’re not in a position to really cut rates, but they can’t really raise rates because the economy is not doing terribly well. So if you’re the BOJ, you’re caught between a rock and a hard place, and odds are you’re just on hold until until further notice.
And William, given that Japan is both a key trade partner and also military ally of the US, could a breakdown or any disruption in these trade talks damage broader US Japan alliance, especially at a time when, you know, cooperation is crucial to counterbalance China’s influence in Asia. It could. I mean in many ways you know I think always think of Japan as having a somewhat of an abusive relationship with the US government right I mean they are equals on some level but the US does defend Japan the US demanded it that way after the after World War II after 1945 and that arrangement still sticks. I’m not sure Donald Trump fully understands that particular history but it is a very difficult issue for Japan to navigate. But I think in many ways Trump has to be careful here because you have seen ties between Japan and South Korea improve. So in many ways Japan and South Korea are so horrified by the Trump 2.0 presidency that they’re actually talking. Japan and South Korea also could be in many ways moving closer to China from an economic and a geopolitical standpoint because they might actually view China at the moment as the more credible and stable power. And that’s the kind of side effect that the Trump that Trump world has to be careful about. The last thing they want to do is take, you know, what is arguably Japan’s most important ally in the world, Japan, and push it into the arms of China. And that’s an open question in the year ahead. Okay, just to wrap, William, what do you then see happening between Japan and the US in the few days left to the 9th of July deadline? Well, I think you’re going to see a lot of ranker back and forth, but Japan’s trade negotiations cannot even get in to see Scott Bessens. So, in many ways, I don’t expect a lot of fireworks in the days ahead. I think you’ll you’ll see some comments back and forth. You could, you know, there is an option that we could see some kind of like non-trade deal, trade deal in the next few days just as, you know, sort of walk away and say we’ve done something. But I think in many ways this trade relationship between Japan and the US, it’s a lot more complicated than the Trump folks ever expected. And I think the prime minister, Prime Minister Sheibba is handling it the right way as elections bear down on him.
Thank you so very much, columnist and author William Pessik with three women trying to chat with you. You really took a lot from us. Thank you.

Japanese Prime Minister Shigeru Ishiba said on Wednesday (Jul 2) that he was determined to protect his country’s national interests, amid a stalemate in trade negotiations with the United States. US President Donald Trump has threatened even higher tariff rates on the Asian ally, telling reporters that a trade deal with Japan is unlikely before a Jul 9 deadline. Tokyo-based columnist and author William Pesek tells CNA’s Asia First that Ishiba has been a “very different character” towards Trump compared to the late Japanese prime minister Shinzo Abe.

Subscribe to our channel here: https://cna.asia/youtubesub

Visit our website: https://cna.asia
Download our app: https://cna.asia/app

Get our editors’ picks of stories via chat apps:
Telegram: https://cna.asia/telegram
WhatsApp: https://cna.asia/whatsapp

Follow us on these platforms:
https://www.facebook.com/channelnewsasia
https://www.instagram.com/channelnewsasia

@channelnewsasia

33 Comments

  1. Rice is a stupid a argument, do people even know what kind of rice the Japanese eats? It is a completely different species. If Japan wanted to eat long grain rice they could have bought it from Thailand and Cambodia. Which is both cheaper and better quality than US. US rice would simply have no market in Japan.

  2. Japan is running circles around Trump? Trump will just send Japan a letter on July 9, 35% on all Japanese cars export to US n Trump will not protect Japan from North Korea,let’s see if Japan will still slow walk this trade deal. This expert does not know what he is talking about, Japan n Korea will not aligned with China based on past history

  3. 90 deals in 90 days…. more like zero deals in 90 days… Idiot Trump can't close the deal…. so much for being the "great negotiator"

  4. Only an idiot will believe this is about Japan banning US GM rice. Japan does import American rice on a quota basis. My guess is that the deadlock is because Trump made an offer Ishiba could not accept. I may be speculating but it is to cut off all trade with China.

  5. Play the song said and done the deal is actually up the president Trump to sign or reject I would say Donald Trump going to get the best deal for America screw Japan

  6. This one lone author (a storyteller), "William Pesek", is an expert whose words are just like a gospel, huh?! Singapore's CNA is quite something…

  7. Here Japanese. We are tired of America's blackmail diplomacy. The percentage of Japanese people who trust America has fallen to 22%, the lowest since World War II.CTTP is important.

  8. If Japan and South Korea eventually are going to basically surrender to China no matter what… which may be what Trump is thinking, than why bother putting any effort into a trade agreement…

  9. Cut that bullshit about Japanese not eating foreign rice. They eat anything. Their rice is so expensive that they willing to eat anything at this point. The Japanese government is only trying to protect the Japanese Rice association, because that's where the money is made by the politicians and rich investors.

  10. 日本人は、石破さんの人柄や振る舞い考え方が嫌いです。
    日本では、側近である赤沢さんのアポなし交渉も批判されています。
    次の選挙で、政権交代が起こることを期待しています。

  11. No real difference between Calrose short rice from California and Japanese rice. Given the rice shortage – the answer isn't too difficult to figure out.

  12. The headline attached to this is complete fiction! So stupid. Japan is "running circles" around Trump?! Ha! Yeah, okay, sure there, buddy. Japan's economy will tank if they don't bring Trump a deal by July 9th. Toyota, Nissan, Subaru, Yamaha, Suzuki, Honda, Lexus, Infiniti. All of those companies would die if they can't sell in America. Japan has taken advantage of free trade in America since the end of WW2. The U.S. helped Japan rebuild for over 80 years now with free trade for them but not for Americans in Japan. Now, they want to act tough and entitled. Spoiled rotten Japan. Tick tock goes the tariff clock.

  13. Why do you need tariffs and non-tariff barriers on foreign rice if Japanese don’t like it and won’t buy it? Drop tariffs to zero. Remove NTBs. And let the Japanese consumer decide.

  14. It is becoming very clear from recent tariffs agreements with China and Vietnam and more with Trump’s recent announcements on coming tariffs letters that the tariffs are here to stay and be at impressive levels . The 3 main goals for Trump are: 1) reduce imports, 2) bring back manufacturing in the US and 3) raise new revenues to pay the US debt. And Trump may very well succeed on all 3 counts. BUT that high tariff policy may also reduce US exports, devaluate the USD, make imports even more expensive and generate a recession in the US and potentially in the whole world. Trump is a gamer, a risk taker but he ran into 3 personal bankruptcies and we have to hope he will not bring the country in another one.

  15. I am just curious. Is this another so-called expert? How many times have they been wrong? Does it matter that Japan and South Korea are talking? Don't the Americans protect both countries? This guy may have TDS.