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Japan shows that President Donald Trump is able to refrain from better deals over trade tariffs, hoping to completely remove Japan’s 25% obligation to import cars, rather than risking domestic political backlash.
Japan, the largest outside investor in the US and closest ally in Asia, is eager to avoid the sourness of Washington’s relationship with Prime Minister Isviva.
But pressure from business leaders and Isba’s own liberal Democratic members has put pressure on them to reject transactions that put the auto sector at risk and forced farmers across the country to recalculate, officials and analysts said.
“Japan was extremely enthusiastic about being the first country to begin negotiations with Washington on tariffs, but that sense of urgency is changing now, with a focus on ensuring that Japan has a significant deal,” Tokyo officials focused on knowing the negotiations firsthand.
Authorities said it is unlikely that they will reach the election of Japanese parliamentary senators by late July.
Japanese negotiators led by Economy Minister Lyosei Akazawa held two meetings with Trump administration officials. The third is planned for next week. Tokyo Finance Minister Katsunobu Kato also hopes to resume consultations with US Treasury Secretary Scott Bescent on the sidelines of the G7 conference held in Canada next week.
Japan’s starting position remains the elimination of all new US tariffs, including 25% collection on automobiles, steel and aluminum imports, and 24% “mutual” tariffs on other Japanese products that have been temporarily reduced to a 10% “baseline” level.
Company and analyst estimates that the impact of US tariffs on large Japanese auto companies on operating profits is expected to be around 200 million yen ($13.7 billion) this year, which ends in March next year, but that impact could be offset by measures such as price increases. The Japanese economy shrunk in the first quarter for the first time in a year.
“Automobile parts and automotive parts are the largest export sectors from Japan to the US,” said the second Japanese official with knowledge of the consultation. “This means that this US negotiations have to address this automated fee issue. If we can’t make progress in this sector, we don’t think we’ll reach a consensus.”
Tokyo’s most powerful offers to Washington could be large-scale purchases of US agricultural products, greater market access to US cars and investments in Alaska’s liquefied natural gas pipeline project, officials said.
But with the July Senate election approaching, Isba told Congress he would not sacrifice the domestic agriculture industry, large employers, to win tariff cuts on automobiles.
“Japan’s position has hardened. Isba is fighting for the political life of him and his party. He can’t just roll over. The car accounted for 81% of the surplus of Japan’s trade with the US in 2024.
Experts said it is unclear how much leverage Japan has in the White House. Tokyo relies on Washington for security, reporting a $630 billion trade surplus of goods with the US in 2024-2025. The Trump administration has further complicated talks, accusing Japan of intentionally weakening the yen.
Isba, who has passed through the fragile coalition, fears that one-sided deals will deepen the crisis of the ruling LDP. His gambling in the October general election backfired, and the party lost a majority in the House of Representatives for the first time since 2009.
The July Senate election could cause further damage, especially if the agricultural lobby feels betrayed by a deal that opens a floodgate to US agricultural imports.
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According to officials, one of the early proposals from Japan was to link the level of investment in the US by Japanese companies that would reduce the proportion of tariffs.
The US Treasury Department and US Trade Representatives did not immediately respond to requests for comment.
“The problem Japan has is, in principle, it doesn’t want a deal that appears to be hammered out at speed, but at the same time, it cannot rely on the idea that the US has patience with sophisticated agreements,” the authorities said with a direct knowledge of the consultation.
Stephen Naggy, professor of politics and international studies at Tokyo International Christian University, said Isba’s strategy was based on the idea that the US value security partnership against tariffs.
“I think Japan will notice Trump is committed to the tariff baseline,” Naggy said. “No matter what it does, Japan cannot escape from this.”
