In yet another escalation amid tense international trade negotiations, former U.S. President Donald Trump has threatened Japan with tariffs as high as 35%, accusing Tokyo of exploiting the United States and undermining trade balances. His statement, made just three days before the scheduled imposition of increased tariffs on July 9, sent shockwaves through markets, with Japan’s Nikkei 225 index dropping by 0.6% and the yen weakening to 143.88 against the dollar.
Trump, speaking in strong tones, claimed that Japan is “spoiled” and must pay tariffs reflecting the U.S. deficit in the bilateral trade balance. Analysts have warned of the potential for a crisis that could lead to mutual trade countermeasures, while calls grow for the Japanese government to reconsider its previously “calm and steady” approach.
Japanese Prime Minister Shigeru Ishiba insists he will not accept a “bad deal,” prioritizing domestic employment ahead of the upper house elections on July 20. The Japanese side maintains that any agreement must be comprehensive, covering both general tariffs and targeted ones on automobiles, steel, and aluminum—sectors particularly sensitive for Japan, as the auto industry contributes nearly 10% of GDP and employs 8% of the workforce.
However, former diplomats like Ichirō Fujisaki suggest that Japan has yet to bring anything “tangible” to the table to appease Washington, while hinting that Japan’s high-tech industry—especially in semiconductor materials, on which the U.S. relies significantly—could serve as leverage.
According to Bloomberg, imposing tariffs of 30%-35% could cause a medium-term contraction of Japan’s GDP by 1.2%, double the 0.6% impact expected from the already announced 24% tariffs. Some strategic analysts warn that without an agreement, the Nikkei index could slide as low as 38,000 points—more than a 4% drop from current levels.
Despite the pressure, most analysts remain cautiously optimistic that a deal will eventually be reached, albeit with more concessions from Japan. As former Ambassador Fujisaki aptly noted, the likely outcome would be a “big win” for the U.S. and a smaller one for Japan.