Japan failed to negotiate with the U.S. when it stubbornly demanded the complete elimination of tariffs imposed by the Trump administration.
Japan's insistence on not reducing its tariff exemption demands is viewed as an unrealistic strategy, diminishing its negotiating power and leading to various political and economic consequences domestically.
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Stubbornly demanding a complete exemption from tariffs has caused Japan to be seen as 'excessive' and has weakened its negotiating position with the U.S.
Tensions in U.S.-Japan trade have escalated as the U.S. imposed an additional 25% tariff on many Japanese imports.
The political weakness ahead of elections may force Japan to concede to the U.S. to sign an agreement.
Why does Mr. Takeshi Niinami call Tokyo's approach a major mistake?
Mr. Takeshi Niinami – Chairman of Suntory and the Japan Business Federation – emphasized that Japan's negotiation approach of 'all or nothing' has made the U.S. feel betrayed, weakening the opportunity to reach an agreement. He believes that instead of demanding a complete exemption from tariffs, Japan should accept a minimum tariff of 10% to maintain an advantageous position in negotiations.
"They underestimated President Trump's determination when they thought that time was on Japan's side. That was a major mistake."
Takeshi Niinami, Chairman of Suntory and the Japan Business Federation, 2024
This rigidity has led the U.S. to raise tariffs from 24% to 25% on Japanese imports, while also creating political pressure on Japan ahead of the Senate elections in July 2024, when the ruling coalition risks losing its majority.
What political impact could Japan face ahead of the July 20 elections?
Faced with significant political pressure from within while the automobile export and rice production industries need protection, the period before the election makes it difficult for Japan to concede further. HSBC and strategic experts warn that increasing pressure may force Japan to accept higher tariffs to reach a timely agreement.
"The rigid agricultural protection policy is causing Japan to lose its ability to negotiate flexibly."
David Boling, Director of Asian Market Analysis Group, Eurasia Group, 2024
This clarifies that Japan is at a crossroads, between maintaining a stance to protect domestic interests and optimizing trade relations with the U.S.
What is President Trump's response and the impact of Japan's agricultural policy?
President Trump publicly criticized Japan's stubbornness, calling it a behavior of 'spoiled indulgence' as Tokyo refused to accept increased rice imports or allow U.S. cars into the market. Mr. Takeshi Niinami and many experts believe that Japan's rigid agricultural protection policy has weakened the objective of building a close relationship with the U.S. set by the late Prime Minister Shinzo Abe.
Negotiations have stalled as Japan firmly insists on no taxation, although trade representative Ryosei Akazawa has repeatedly negotiated and directly called the U.S., he does not have the authority to concede on tariff levels.
Will a weak Yen help Japan offset the damage from the new tariffs?
Japanese business experts believe that the depreciation of the Yen against the USD may alleviate some of the negative impacts from U.S. import tariffs. The current exchange rate of about 145 Yen/USD is much higher than 110 Yen/USD during the early Trump administration, enhancing the competitiveness of Japanese exports.
Nevertheless, Japan still maintains a spirit of readiness to negotiate to avoid further heavy tax pressure, with U.S.-Japan relations remaining a top priority.
How did the meeting between Japanese and U.S. representatives go?
On the third day, Mr. Ryosei Akazawa had a nearly 40-minute meeting with Howard Lutnick – the U.S. Secretary of Commerce, demonstrating Japan's proactive willingness to prepare to go to Washington for further negotiations. This is an effort to seek a feasible solution before August 2024, when the new tariffs are expected to be implemented.
Frequently Asked Questions
Why is Japan insisting on a complete exemption from U.S. tariffs? Japan believes that the strategic alliance with the U.S. deserves tax privileges; however, this strategy is considered inflexible and flawed in negotiations. How does the 25% U.S. tariff affect Japanese exports? The increased tariffs make Japanese goods more expensive in the U.S., negatively impacting export industries like automobiles and increasing domestic political pressure. Does a weak Yen help mitigate the tax impact? The Yen's depreciation against the USD supports increased competitiveness for Japanese goods, helping to offset some losses due to U.S. imposed tariffs. Can Japan reach an agreement before August 2024? Due to rising political and economic pressures, Japan may be forced to concede to reach an agreement before the tariffs are implemented. What authority do Japanese representatives have in negotiations? Chief negotiator Ryosei Akazawa has limited power and is not allowed to make significant concessions on tariff levels, complicating negotiations.
Source: https://tintucbitcoin.com/japan-mistake-crypto-strategy/
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