|
Last week, the Asia Media Centre highlighted the key trade-offs Southeast Asian nations made to avoid US President Donald Trump’s massive reciprocal tariff rates, from his April 2 “Liberation Day” announcement, to recalculations in early July, and finally to the adjusted rates formalised in an Executive Order on July 31.
This time, we turn to North Asia, examining the pledges, concessions, and trade-offs that Japan, South Korea, Taiwan, Mongolia, and North Korea made to secure better terms with Trump. China, given its unique position in this trade landscape, will be covered in a separate feature.
Japan: From Tense Threat to Managed Compromise
Japan was among the first in the firing line. Trump’s Liberation Day speech floated tariffs of up to 25% on Japanese vehicles and 50% on steel and aluminium. Tokyo scrambled to avert the full force of these measures, ultimately negotiating the rate down to 15%. Still higher than the single-digit tariffs Japan had long enjoyed, but far less punishing than the original threat.
To secure this reduction, Japan pledged more than US$550 billion in investments across US industries, from semiconductors and energy infrastructure to shipbuilding, with Washington retaining 90% of the profits.
It agreed to expand market access for US goods, boosting rice imports by 75% and committing to US$8 billion in purchases of corn, soybeans, and bioethanol annually. Japan also removed restrictions on US cars and adopted American safety standards, while agreeing to buy 100 Boeing aircraft and billions in US defence equipment each year.
However, confusion soon followed the July 31, 2025, Executive Order issued by President Trump.
Both nations misinterpreted aspects of the adjusted tariffs, particularly on automobiles. Although they had agreed on a 15% reciprocal tariff, it was unclear whether this rate would replace the existing 27.5% auto tariff or be applied on top of it—raising alarm over possible “tariff stacking” and especially worrying Japan’s export-dependent auto industry.
In response to the uncertainty, Japanese trade envoy Ryosei Akazawa travelled to Washington on August 5, 2025, to seek clarity and urge US officials to quickly issue an executive order formalising the agreed terms. His visit underscored the differing interpretations of the deal’s implementation and the importance of the tariff concessions to Japan’s auto sector.
By August 7–8, 2025, following negotiations, the US agreed to amend the July 31 order—ensuring Japan would not face compounded tariffs, promising refunds for excess duties, and reaffirming the reduction of auto tariffs to 15%. Akazawa called the stacking error “regrettable” and noted this amendment restored the agreed framework.
The relationship between Trump and Japan has combined moments of friction with pragmatic cooperation.
In his first term, Trump frequently raised concerns over Japan’s trade surplus and defence contributions, but his personal rapport with the late Prime Minister Shinzo Abe—strengthened through regular golf games—helped maintain the stability of the alliance.
In his second term, under Prime Minister Shigeru Ishiba, the partnership remains strategically important in the Indo-Pacific, although recent tariff disputes underscore the sensitivity of economic arrangements between the two countries.
Continue reading on AMC website.
Part 1: How Southeast Asia Negotiated Lower US Tariffs
-Asia Media Centre
|
