The U.S. and Japan have reached a partial trade agreement for certain agricultural and industrial goods, including fasteners manufactured in Japan, according to the Office of the U.S. Trade Representative. The U.S. will “reduce or eliminate” tariffs on fasteners and other industrial goods, including certain machine tools and steam turbines.
Further details on the amount and timetable of tariff reductions or eliminations were not provided.
In exchange, Japan will eliminate or reduce tariffs on an additional $7.2 billion of U.S. food and agricultural products.
Japan’s Parliament Just Approved a Trade Deal With the U.S.
On December 04, Japan’s parliament approved a trade pact with the U.S. that opens the country’s markets to American beef and other agricultural products, as Tokyo tries to thwart a threat from Donald Trump to impose new tariffs on its lucrative car exports.
The deal cleared a last hurdle with approval from Japan’s upper house on Wednesday. The U.S. has been pressing for the agreement to come into force by Jan. 1, which could help Trump land votes for his 2020 re-election campaign in agricultural areas that may benefit from the deal.
Prime Minister Shinzo Abe’s ruling Liberal Democratic Party coalition holds majorities in both houses of parliament and was able to win passage easily. The deal has nevertheless been criticized by opposition lawmakers, who say it gives away bargaining chips without a written guarantee that Trump won’t impose so-called national security tariffs as high as 25% on the country’s auto sector.
Trump was eager to make a deal with Japan to appease U.S. farmers whose access to the Chinese market has been constrained as a result of his trade war with Beijing. American agricultural producers, also reeling from bad weather and low commodity prices, are a core component of Trump’s political base.
The threat of punitive tariffs on the exports of cars and car parts, a $50 billion-a-year sector that is a cornerstone of the Japanese economy, pushed Abe to accept two-way trade talks with the U.S. after he failed to persuade Trump to return to a Pacific pact he had rejected.
Abe has said Trump assured him when they met in New York in September that he wouldn’t impose fresh tariffs. Under the current deal, Japan is set to lower or abolish tariffs on U.S. beef, pork, wheat and wine, while maintaining protection for its rice farmers. The U.S. will remove duties on Japanese exports of some industrial parts.