Asia Business Channel

US signs trade deal with Japan and escalates its trade war with China

Japanese Prime Minister Shintaro Abe and US President Donald Trump.


The United States signed a trade agreement with Japan on Monday that will have the effect of reopening some of the agricultural markets that U.S. farmers had lost after US President Donald Trump withdrew the U.S. from the Trans-Pacific Partnership after taking office in January 2017.

Trump said at a press conference announcing the agreement that, "I think we're at a stage with Japan where our relationship has never been better than it is right now."

Officials of the Trump administration have said the deal would reduce tariffs on $7 billion worth of American agricultural products. Products that are covered by the agreement include almonds, beef, cheese, pork, wheat, and wine. In return, the US will lower tariffs on Japanese industrial goods under the agreement.

While Trump portrays the deal as a major win for farmers and ranchers, critics note that it only recovers a portion of the benefits that the U.S. would have gained from the Trans-Pacific Partnership, an 11-country trade agreement, and the new agreement does not current auto tariffs or additional tariffs that Trump threatened Japan with last year on the basis of national security concerns.

Japanese Prime Minister Shinzo Abe has said he was assured the country would be spared from such measures, but that was not explicitly laid out in the text.

Robert Lighthizer, the US Trade Representative said to reporters after the deal was reached that, "It certainly is the Japanese ambition to have car tariffs be discussed, but at this point, it's not part of this agreement."

Because of its trade war with China, the Trump administration has increasingly sought to placate farmers, who have suffered financial losses. While Trump has found support by many consumers to fight against Chinese trade practices seen as unfair, business leaders have pointed out that the President does not have a long-term strategy and that the longer the administration delays a trade deal, the more companies and consumers will ultimately be hurt.

Fortune Magazine noted in a recent article that, “The latest economic data suggests that the trade conflict is hitting America hard. The ISM Purchasing Managers Index (PMI) released on October 2, recorded the lowest levels of activity in manufacturing since the great recession; the worst signal of all was the sharp drop in exports. The following day, the PMI for services posted the slowest reading in three years, and confirmed suspicions that the trade-driven malaise in manufacturing is slowing sectors from packaging to consulting.”

And in its efforts to make the trade talks with China more difficult, the Trump administration announced on October 8th that The Department of Commerce has added 28 new companies and agencies to its “blacklist” of Chinese firms banned from doing business in the United States. Most of the new companies added to the U.S. blacklist are technology companies that specialize in artificial intelligence, digital surveillance and machine learning.




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