[Text/Observer Network Ruan Jiaqi]

In the first round of tariff negotiations, Japan and the United States made little progress. After the second round of negotiations began on May 1st, the US side eager to show results "celebrated prematurely", boasting that this meeting was "honest and constructive" and claimed that both sides would soon launch working-level consultations. Unbeknownst to them, they were met with a "snub" from Japan.

According to a Reuters report on April 2nd, US Treasury Secretary Besante, Commerce Secretary Lutnick, and Trade Representative Greer, along with Japanese trade negotiator and Minister of Economic Revitalization Akira Akazawa, are holding their second meeting in Washington this Thursday.

Regarding this meeting, the US Treasury Department stated in a statement that "during the honest and constructive discussions about fair and reciprocal trade, Secretary Besante emphasized to Minister Akazawa the importance of tariffs and non-tariff measures, economic security as national security, and other concerns."

Besante then posted on social platform X, boasting that he was "highly encouraged by the rapid and positive interaction between Japan and the United States," and expressed hope that these two allies could quickly reach consensus on a series of bilateral issues. Greer also welcomed Japan's participation in the consultation and reiterated the strong bilateral relationship between the US and Japan.

However, according to Reuters, in stark contrast to the US side's jubilant display of results, Japanese media reports described the meeting more cautiously.

On Friday, local time, the Nikkei Shimbun cited anonymous sources as saying that at Thursday's meeting, Japanese officials outlined what measures they would take to reduce Japan's trade surplus with the US, such as reviewing non-tariff barriers for car imports and expanding purchases of American agricultural products. However, the US negotiators seemed unwilling to lower tariffs on cars, steel, and aluminum, a stance that left Japan feeling that cooperation would still face significant challenges.

Subsequently, Prime Minister Shinzo Abe, when interviewed by Japanese media, insisted that tariffs represented by auto tariffs were "absolutely unacceptable" for Japan.

He emphasized to Fuji News Network that reducing the US trade deficit is possible... "We will strive to achieve this, but it must never come at the expense of Japanese jobs."

On April 16th, local time, Japan's Minister of Economic Revitalization Akira Akazawa visited Washington, USA. President Trump suddenly announced that he would personally attend the meeting and intervene in the trade negotiations with Japan.

Richard Katz, a former senior researcher at the Carnegie Endowment for International Peace, told Reuters that the US even refused to discuss the issue of imposing a 25% tariff on cars, parts, steel, and aluminum, adopting an extremely tough stance.

He said that originally, the two countries planned to complete the negotiations before July, which is before the end of the so-called 90-day moratorium on "reciprocal tariffs." However, it now appears increasingly unlikely that an agreement will be reached, and by then, the measure of the US imposing a 24% tariff on all Japanese imports will be reinstated.

According to Reuters, Japanese negotiator Akazawa stated that plans were underway for another meeting as early as mid-May. He indicated that the focus of the trade negotiations was to expand trade, reduce non-tariff trade barriers, and strengthen economic security.

Additionally, according to a Wall Street Journal report on April 2nd, after the second round of negotiations, Japanese Finance Minister Kato Katsunobu, during an interview in Tokyo on Friday, revealed more details about the Japan-US trade negotiations.

When asked whether the US pressured Japan in the negotiations to limit its economic ties with China in any trade agreement, Kato responded that regardless of what demands the US made, "Japan must consider its own economic security." He added that Japan was concerned about the risks of over-reliance on raw materials and components from a single country.

Kato also oversees currency-related affairs. He revealed that no mention of a "Plaza Accord 2.0" was made during his negotiations with US Treasury Secretary Besante. As a product of Japan's forced compromise during the height of US-Japan trade friction, the 1985 Plaza Accord forced the yen to significantly appreciate against the dollar in an attempt to address America's massive trade deficit.

In response to Trump's criticism that Japan intentionally devalued the yen to gain a trade advantage, Kato again denied Japan's manipulation of the yen exchange rate and emphasized that exchange rates should be determined by market forces.

On the same day, Kato Katsunobu made a rare statement on Tokyo Television, stating that Japan's $1.13 trillion worth of US Treasury bonds could serve as a "chip" in tariff negotiations with the Trump administration, but he stressed that "whether or not to use it is another matter."

Data from the US Treasury shows that Japan is the largest foreign holder of US Treasury bonds. As of January 2025, Japan holds approximately $1.08 trillion worth of US Treasury bonds. Japanese media analysis suggests that Kato's remarks mark the entry into a "new stage of financial博弈" in the US-Japan trade friction. Japan had previously denied using US bonds as a negotiation tool. In 2019, the Abe government explicitly ruled out this option.

Some analysts pointed out that the practicality of such an action is questionable. If Japan sells US bonds, it will lead to a decrease in the value of its own holdings and may trigger global bond market turmoil. Additionally, the Japanese bond market lacks depth, and the yen's safe-haven attribute depends on the US dollar system.

However, some analysts believe that it is not entirely impossible to reveal this "ace" card amidst the Trump administration's growing attention to the US bond market.

Martin Whetton, head of financial markets strategy at Westpac Banking Corporation in Sydney, told Reuters, "They (Japan) don't have to do anything. But they can put themselves in a favorable negotiating position. After all, this is the art of negotiation."

This article is an exclusive contribution from Observer Network and cannot be reprinted without permission.

Original source: https://www.toutiao.com/article/7500128107811111424/

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