Japan holds firm as U.S. tariff negotiations loom
On Monday, Japanese Prime Minister Shigeru Ishiba told parliament that one should not expect Tokyo to make "major concessions" to reach an agreement with the US on Donald Trump's tariffs. The yen exchange rate is likely to come under scrutiny, which Washington believes is undervalued.
As part of the so-called reciprocal tariffs that Donald Trump announced and then suspended for 90 days, imports from Japan were subject to a tax of 24%. However, the 10% tariffs on almost all imported goods to the US remain, as well as the 25% charges on automobiles, which significantly impact the Japanese economy.
The Japanese delegation will begin tariff negotiations with the Trump administration on Thursday. On Monday, Prime Minister Shigeru Ishiba, as reported by Reuters, left no illusions regarding the expectations of quickly reaching an agreement with Washington.
The Japanese Prime Minister expressed the view that significant concessions should not be made merely to accelerate the negotiation process. He pointed out the importance of grasping both the reasoning and the emotional motivations behind Trump's positions when engaging in talks with the United States.
Yen exchange rate under scrutiny
Reuters writes that one of the issues to be discussed is the yen exchange rate against the dollar. Washington believes Japan is undervaluing its currency to gain an advantage in exports to the US.
According to Reuters, debates concerning the yen have the potential to steer towards monetary policy matters, which could add complexity to the Bank of Japan’s considerations regarding the pace and scale of raising its still low interest rates.
The board of Japan's central bank previously expressed concern about the negative impact of tariffs on the country's economy, through which - as reported by Kyodo agency based on its sources - "it will have to be particularly cautious when considering the timing of an interest rate hike".
According to Japanese government data, cars accounted for over 28% of Japan's total exports to the US in 2024, reaching nearly £32 billion.
