Trump threatens Japan with new tariffs

President Donald Trump has announced today his intentions of implementing steeper custom duties on all imported goods from Japan as trade talks in other areas of the world progress.

Japanese Prime Minister Shigeru Ishiba (left) and President Donald Trump (right).

Japan has been largely spared from the long list of tariffs that President Trump has implemented on most imported goods from overseas. Currently in place along with the baseline 10% tariff on all goods includes a 25% tariff on autos/auto parts, a 25% tariff on steel/steel derivatives, and a 25% tariff on aluminum/aluminum derivatives. This pales in comparison to the sometimes triple-digit rates that the president proposed on countries like the People's Republic of China. Also, Japan ranks as one of Trump's greatest political allies, with its prime ministers like Shinzo Abe being very close friends to the American president.

But now, seeking to raise revenues from tariffs to pay for the luxurious tax cuts from the "big, beautiful bill," the president is now seeking to tariff countries that have been neglected by his "Liberation Day" policies, most particularly Japan. He has proposed a 24% reciprocal tariff on previously unaffected products from Japan, which is expected to start on July 9th unless a trade deal has been reached. Japan has set no fixed deadline itself.

With Japan being both an important military ally against China in Asia as well as a trading partner, trade talks are very likely as both sides would wish to deescalate, especially Japan.

With Japanese Prime Minister Shigeru Ishiba's response to today's news currently being unknown, it is unclear how the country will react. But Ishiba did state on June 17th in response to trade disagreements with the United States like the 25% auto tariff, "[we will have] sincere discussions… exploring the possibility of an agreement until the last moment." So, it is fairly likely that Japan will want to negotiate.

The Nikkei, although higher than yesterday, has fallen significantly since Trump's announcement, reducing by several hundred points since noon Monday.