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U.S.-Japan Trade Deal Includes Trump Pledge for No Auto Tariffs

Date: October 8, 2019
Source: Bloomberg

MEMA Industry News Editor’s Note: Japan is an important trading partner for U.S. motor vehicle parts manufacturers, and MEMA has supported a U.S.-Japan agreement. We are encouraged by this step toward an agreement, and we will remain engaged with the administration in the next phase of U.S.-Japan negotiations. For more information please contact Ann Wilson or Leigh Merino.

WASHINGTON -- The U.S. and Japan signed a limited trade deal intended to boost markets for American farmers and give Tokyo assurances, for now, that President Donald Trump won’t impose tariffs on auto imports.

The accords on agriculture and digital trade cover about $55 billion worth of commerce between the world’s largest and third-largest economies, U.S. Trade Representative Robert Lighthizer said at a ceremony in the Oval Office alongside Trump.

The accord is a “game changer for our farmers” and ranchers, Trump said at the event.

The goal is for the accord to take effect Jan. 1.

Trump, who faces re-election next year, was eager to make a deal with Japan to appease U.S. farmers who have been largely shut out of the Chinese market as a result of his trade war with Beijing. American agricultural producers, also reeling from bad weather and low commodity prices, are a core component of Trump’s political base.

Under the deal, Japan will lower or reduce tariffs on some $7.2 billion of American-grown farming products, including beef and pork.

Prime Minister Shinzo Abe’s priority was to win a pledge that the U.S. won’t slap tariffs on Japanese automobile exports, a sector valued at about $50 billion a year and a cornerstone of the country’s economy.

The written text of the deal doesn’t explicitly cover auto tariffs, but Abe has said he received assurances that Japan would be spared from them.

The proposed pact won’t lower the barriers protecting Japan’s rice farmers -- a powerful group supporting Abe’s ruling Liberal Democratic Party. This could help the prime minister smooth the deal’s course through parliament, where it must be ratified before coming into effect.

The U.S. has said this agreement -- which was signed in principle on the sidelines of the United Nations General Assembly last month -- is just the first phase of a broader agreement.

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