Japan Seeks to Maintain Trade Deal Benefits Despite Trump’s New Tariffs

Japanese officials are working to preserve favorable treatment under their existing trade agreement with the U.S. as President Trump implements new 15% tariffs on imports. The country fears some exports could face higher costs if the new duties are layered on top of current rates.

Japanese officials announced Tuesday they have formally requested that the United States honor their current trade agreement terms as President Trump rolls out a new tariff structure that could impact Japanese exports.

The request comes as Japan carefully navigates trade relations ahead of Prime Minister Sanae Takaichi’s planned visit to Washington next month. Officials worry that Trump’s latest tariff measures might increase costs for certain Japanese goods shipped to America.

During a Monday phone conversation, Japan’s trade minister and U.S. Commerce Secretary Howard Lutnick reaffirmed both nations’ commitment to implementing last year’s trade agreement “in good faith and without delay,” according to Japan’s trade ministry.

The new tariff situation emerged after the U.S. Supreme Court ruled Friday against Trump’s previous tariff structure under the International Emergency Economic Powers Act. In response, Trump implemented temporary 15% import duties on all countries using alternative legal authority.

Trump also issued warnings that nations abandoning their U.S. trade agreements would face even steeper penalties through other trade regulations.

Trade Minister Ryosei Akazawa explained during a Tuesday press conference that certain Japanese products currently enjoying reduced tariff rates might encounter higher fees if Trump’s new duties are added to existing charges. Ministry officials indicated that goods previously benefiting from tariffs below 15% under most favored nation terms could potentially face increased costs.

Akazawa emphasized that Japan has specifically asked for treatment matching the favorable terms established in last year’s bilateral agreement.

The July 2023 deal between Washington and Tokyo reduced automotive and other product tariffs to 15%, while Japan committed to a $550 billion investment and loan package for U.S. projects.

Japanese officials declined to comment directly on the Supreme Court’s decision, stating only that they would carefully review all aspects of the ruling.

Yoshinobu Tsutsui, who leads Japan’s largest business organization Keidanren, told media outlets the court decision “proved checks and balances are in effect” and represented a “positive for the economy overall.” However, he noted Trump’s new tariff policy creates additional uncertainty for business investment decisions, the Yomiuri newspaper reported.

Economic projections suggest significant benefits if the U.S. avoids implementing permanent replacement tariffs for the struck-down IEEPA measures. Nomura Research Institute economist Takahide Kiuchi estimates Japan’s real GDP could increase by 0.375% annually under such circumstances.

Last week, both countries announced the initial three U.S. projects worth $36 billion that Japan will finance, encompassing an oil export terminal, industrial diamond manufacturing facility, and natural gas power station.

“It’s not that Japan was forced into a loss-making agreement,” Akazawa stated, describing the tariffs-and-investment package as a “win-win deal” addressing mutual economic security concerns including reliance on Chinese rare earth materials. He confirmed no plans for additional U.S. trade negotiations.

Government sources familiar with the discussions revealed Tokyo will avoid seeking agreement modifications, fearing Trump might impose harsher industry-specific tariffs unaffected by the Supreme Court ruling, particularly targeting Japan’s crucial automotive sector.

With Takaichi’s late March Washington visit approaching—which Tokyo considers vital for security cooperation amid concerns like China’s export restrictions—Japan plans to maintain its current deal to preserve stable U.S. relations, sources indicated.