【Text/Observer.com, Xiong Chaoran】On June 29 local time, U.S. President Trump told an interview with Fox Business Channel that because Japan does not import American cars, Japanese cars in the United States should be subject to a 25% car tariff. In response, "Nikkei Asia" reported, this statement shattered Japan's hope of obtaining tariff exemptions by relying on the relationship of being a "reliable ally of the United States".

The report said that the Trump administration announced three sets of tariffs on goods from many countries: first, a base tariff of 10%, second, so-called "equivalent tariffs" based on trade deficits which have been temporarily suspended, and third, specific industry tariffs of 25% on automobiles, steel and aluminum based on so-called "national security reasons." On April 2 local time, Trump announced that the "equivalent tariff" for Japanese goods would be 24% (including a 10% "base tariff").

U.S. government officials believe that the automobile tariff announced in March this year under Section 232 of the Trade Expansion Act of 1962 is non-negotiable, while Japan's Minister for Economic Revitalization and Chief Trade Negotiator Akihisa Akazawa has been almost weekly visiting Washington to seek the cancellation of all tariffs including those on automobiles.

Video screenshot of Trump accepting an interview from Fox Business Channel on June 29

According to the report, when asked whether he would extend the exemption period for the "equivalent tariffs" beyond the original deadline of July 9, Trump said through Fox Business Channel that he preferred to send letters to various countries declaring the end of negotiations, and said that these countries could continue trading with the United States as long as they paid the tariffs. "I will send a letter - this is the end of the trade agreement," he said: "I can send one to Japan... That's how it is, you will pay a 25% tariff on your cars."

Trump accused the unfair auto trade situation between the U.S. and Japan, saying that the tariffs are paid by the importers in the destination country, not the exporters. "We don't export cars to Japan," he continued: "They don't accept our cars, but we transport millions of their cars to the U.S. It's unfair. I explained this to Japan, and they understood. We have a big deficit (trade deficit) with Japan, and they also understand that."

Trump said that Japan buying U.S. oil and other products could help reduce the trade deficit, but he seemed to prefer getting tariff revenue. He also warned that if other countries imposed 35% or 40% tariffs on American cars, he would raise the 25% car tariff to the same level.

"Nikkei Asia" noted that in fact, Japan has already implemented a zero tariff policy on imported passenger cars, while the U.S. generally imposes a 2.5% tariff on imported passenger cars, but under the USMCA, allows cars from Mexico and Canada to enter duty-free. Notably, many Japanese automakers are using this provision of the agreement, signed personally by Trump in 2020, to avoid tariffs.

Local time May 30, Japan-U.S. held the fourth round of trade negotiations. Visual China

Currently, Japan's negotiators, Akihisa Akazawa, hope the U.S. will cancel the 25% industry tariff and the 24% "equivalent tariff." The report said that Trump's latest statement stance has cooled down Akazawa's hope.

Previously, to reach a trade agreement, Akazawa has held six rounds of negotiations with the U.S., mainly focusing on expanding trade between the two countries, re-examining non-tariff measures, and strengthening economic security cooperation. Japan has shown willingness to cooperate with the U.S. in areas such as shipbuilding technology and liquefied natural gas development, but there remain many differences in positions between the two sides.

Recently, Akazawa just ended the seventh round of negotiations with U.S. counterparts, including a one-hour meeting with U.S. Commerce Secretary Randal Quarles, but in this round of negotiations, he was unable to meet with U.S. Treasury Secretary Janet Yellen.

"Nikkei Asia" previously analyzed that as an American ally and largest investor, Japan has tried to secure special tariff exemptions from the beginning, which may eventually lead to a harder U.S. stance.

"The U.S. rushing to negotiate with China is another miscalculation for Japan," the Japanese media pointed out. As one of the negotiation tactics, Japan had originally planned to propose to the U.S. that both sides cooperate in areas where the U.S. and China have tensions, such as strengthening the rare earth and semiconductor supply chains. However, the U.S. reached an agreement framework with China first, making Japan's proposal less attractive.

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