Japan seeks trade compromise amid US tariff pressure

Japanese Prime Minister Shigeru Ishiba has pledged to pursue negotiations with the United States in hopes of reaching a mutually beneficial trade agreement, following President Donald Trump’s announcement of 25% tariffs on Japanese goods starting August 1.

Speaking at a cabinet meeting convened to address the looming trade friction, Ishiba acknowledged the urgency of the situation but remained firm on Japan’s core interests. “We have received a proposal from the United States to swiftly proceed with negotiations towards the newly set August 1 deadline, and that depending on Japan's response, the content of the letter could be revised,” Ishiba said, Caliber.Az reports via foreign media.

The Japanese leader noted that while a deal had yet to be finalised, ongoing discussions had already helped avert even more severe tariff measures. “Recent talks had helped Japan avoid even steeper tariffs of around 30% to 35%,” he stated, emphasising Tokyo’s desire to “actively seek the chance of an agreement that benefits both countries, while protecting Japan's national interest.”

Trump’s July 7 move to notify multiple trading partners of the upcoming tariff hikes has cast a shadow over global markets. While the U.S. president signalled openness to delaying the new levies if acceptable proposals were received, the immediate economic consequences for Japan have been tangible.

The yen slumped to a two-week low of 146.44 per dollar as market participants abandoned expectations of a near-term interest rate hike from the Bank of Japan. "If the new deadline is set on August 1, the BOJ probably won't be able to say much at the upcoming report in July," said Takeshi Ishida, strategist at Kansai Mirai Bank. "Market expectations of a near-term rate hike will be rolled back."

Finance Minister Katsunobu Kato, speaking at a separate press conference on July 8, said there were currently no plans to engage in exchange rate talks with U.S. Treasury Secretary Scott Bessent.

Japan’s failure to finalise a trade deal before the July 9 expiration of Trump’s temporary tariff suspension has increased economic pressure on the export-driven economy, especially over its vital automobile sector, which had been the focus of Japan’s efforts to eliminate a 25% levy.

With an upper house election looming on July 20, Ishiba has warned against sacrificing national interests for a rushed agreement. “Japan will not make 'easy concessions' for the sake of an early deal with Washington,” he stated, amid declining public support. Recent polls suggest Ishiba’s ruling coalition may struggle to retain a majority, potentially complicating Tokyo’s negotiating leverage.

By Vugar Khalilov