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Donald Trump suspected that the US would reach its Asian allies as he threatened to increase Japan’s taxes and escalated trade rhetoric before a suspension in several sudden tariffs.
The US president said it would impose a new tax on countries that did not agree to the trade contract by July 9, when “mutual” tariffs released in April will resume.
He also picked out Tokyo, an important trading partner, one of the first countries to seek business with Trump after shocking the world markets by launching a world trade war on “Liberation Day” in April.
“We dealt with Japan. I don’t know if we’ll do business or not. I doubt that,” Trump said.
“Whatever the numbers we decided, like, ‘Thank you. I know we can’t do what we need to do. So we can’t pay 30%, 35%,” he said. “Because we have a very large trade deficit.”
The Japanese market fell on Wednesday, with the exporter-oriented Nikkei 225 index falling 0.5% by early afternoon and the benchmark Topix up 0.1%. The yen fell 0.2% against the dollar as it traded around 143.75 yen.
Comments from the president suggested that Trump is willing to take a hardline on negotiations with his trading partners despite supporting his higher global tariffs earlier this year in the face of deep market turmoil.
The US imposed a 24% tariff on all imports from Japan on the so-called liberation day of Trump on April 2nd, then temporarily lowered to 10% over 90 days to allow the speech.
Trump at the time claimed he would sign 90 transactions during the 90-day hiatus, but only attacked a new trade deal with the United States.
The threat of increasing tariffs on the world’s fourth-largest economy raises the fear that Trump will rekindle the world trade war if his officials fail to line up with the country before his own deadline next week.
The president told Air Force 1 reporters on Tuesday that he was not considering extending the deadline to allow discussions to continue next week.
He accused Japan of being “spoiled” and of refusing to buy more American rice or put US-made cars in its market.
The automobile is a major driver due to the value of Japan’s large commodity trade surplus with the US, followed by industrial and electrical machinery for the most recent fiscal year at $63 billion. Japan’s largest imports from the US were power generation machines, energy and grain.
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Japan already faces 10% tariffs for most of its exports to the US, but Japanese cars and auto parts are also subject to 25% border tax tariffs. Steel and aluminum face 50% collection.
US and Japanese trade officials have been trapped in intense negotiations since the beginning of this year. According to one person familiar with the consultation, Japan is slowly accepting that it will not be exempt from automobile tariffs, but it wants to ensure that the final transaction will take place.
“Japan is digging its heels with the assertion that whatever the transaction is, this is actually it and that there is no further tariff hike. Japanese companies need to know exactly what the tariff is and start planning it.
Additional reports by George Steer of New York and William Sandland of Hong Kong
