【By Observer News, Yuan Jiaqi】

Before the tariff deferral period on July 9, Japan was stabbed in the back by its so-called "close ally" — U.S. President Trump sent a letter raising tariffs on Japan to 25%, higher than the rate announced in early April this year.

However, just as Prime Minister Ishiba Shoichi made bold statements, insisting that "Japan must not be looked down upon in negotiations," one of Japan's most influential business leaders accused the Japanese government of making "mistakes" in its trade negotiation strategy with the United States.

According to a report from the UK's Financial Times on the 8th, Takeshi Niinami, CEO of Suntory Holdings, criticized the Japanese government's insistence on completely abolishing Trump's tariffs, which might make the president feel "betrayed" by Japan.

Niinami is a major figure in Japan's business community. In addition to his corporate position, he serves as a representative director (highest position) in the Keizai Domo (Economic Association), and is also a member of the Economic and Fiscal Policy Advisory Council, which provides policy advice to the Japanese prime minister.

He added that if Japanese negotiators had shown more flexibility, Japan could have secured a 10% so-called "base tariff."

"They underestimated Trump's determination," Niinami complained to the Financial Times on Tuesday, "they thought time was on Japan's side, which was a big mistake."

He also believes that Tokyo is now in a weaker position and may have to make significant concessions to reach an agreement with the U.S. Moreover, the negotiation window before the Japanese House of Councillors election this month is narrowing, and when the election takes place, Ishiba's Liberal Democratic Party may lose its ruling advantage.

"It may already be too late," said Niinami.

He further accused the Japanese government's "stubbornness" for "disappointing" the political legacy left by the late former Prime Minister Shinzo Abe. In his view, Ishiba refused to sacrifice the interests of rice farmers to protect the Japanese auto industry.

"Trump had high expectations for Japan because of Abe, (he believed) Japan could become a model for tariff negotiations," said Niinami, "we should have fully understood this level of expectation."

The British media reported that Niinami's "unusually blunt comments" were appreciated by David Boling, the Japan and Asia Trade Director at Eurasia Group, an American think tank. During the Obama administration, Boling served in a senior position in the Office of the U.S. Trade Representative and directly participated in U.S.-Japan trade negotiations.

"Japan taking an extreme stance, demanding that the U.S. must cancel all tariffs, is a serious miscalculation. This strategy is pure fantasy," he said, "if Japan wants to reach an agreement before August 1, it needs to be more pragmatic."

Photo from CNBC video of Takeshi Niinami (right)

According to Japanese officials, on Tuesday, Japanese negotiators, including Economic Revitalization Minister Akazawa Ryohei, had a 40-minute phone call with U.S. Commerce Secretary Rutenberg, and stated that the negotiators are "ready to fly to Washington for further negotiations."

Meanwhile, on the 9th local time, Prime Minister Ishiba Shoichi delivered a street speech in Funabashi City, Chiba Prefecture, emphasizing that Japan "must not be looked down upon."

He said this is a battle for national interests, "even though the U.S. is our ally, we must firmly state our position and protect what we must protect."

In addition, Shigeki Onodera, head of the LDP's Policy Research Council and a member of the House of Representatives, denounced Trump's tax increase as "extremely excessive" during a rally in Kamimachi Town, Saga Prefecture on the same day.

Earlier this week, he also strongly criticized the U.S. practice of notifying allied countries of tax increases via a letter, calling it "extremely disrespectful," and urged the government not to hastily compromise to U.S. demands.

A July 9 report by Nikkei Asia pointed out that Trump's tariff letter shattered Japan's illusion of a "special relationship" between the two countries, and the wording and tone of the letter shocked Japanese officials. Despite Japan's emphasis on its large-scale direct investment and strategic importance in negotiations, the U.S. ignored it.

Analysts warned that Japan now must adapt to the new reality, even though Japan has continuously emphasized the alliance relationship, cost-benefit considerations, and grand strategy assumptions, the old political and economic logic of exchanging economic leniency for security contributions and political alliances no longer seems to work. The most obvious example is that Prime Minister Ishiba repeatedly emphasized this point, but Trump did not respond.

Mireya Solis, professor of Japan studies at the Brookings Institution, said: "The continuity of the U.S.-Japan 'special relationship' is being tested."

Yuki Tatsumi, research fellow at the Stimson Center's Japan Project, analyzed that the Trump administration may have already concluded that Ishiba's position is wavering, and lacks the motivation to protect him before the House of Councillors election. She said, "The U.S. may believe that regardless of the outcome of the House of Councillors election, Japan is unlikely to have a strong leader."

The Japanese House of Councillors election will be held on July 20, and whether the ruling coalition of the Liberal Democratic Party and Komeito can maintain a majority of seats is a key uncertainty. In the House of Representatives election held last October, the ruling coalition lost its majority and became a minority.

A recent survey by Kyodo News on July 5-6 showed that the opposition party bloc is more popular than the ruling coalition, with nearly half (49.9%) of respondents hoping the ruling coalition does not achieve a majority. The survey also showed that the approval rating of Ishiba's cabinet dropped to 25.4%, a decrease of seven percentage points from the previous survey.

When asked about the impact of the election on the tariff negotiations, Onodera said on the 8th: "It has nothing to do with the election. Tariff issues will have a huge impact on people's lives. It concerns national interests, and I hope the government will firmly deal with it."

This article is an exclusive piece by Observer News. Reproduction without permission is prohibited.

Original: https://www.toutiao.com/article/7525346266520371750/

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