Kenneth R. Weinstein: Donald Trump’s opportunity to deliver another historic Japan trade agreement

President Donald Trump and Prime Minister Shigeru Ishiba have a unique opportunity to strike a trade deal benefiting both countries.

Trump’s priorities are clear: improving market access for American agriculture, automobiles and digital services while addressing a $70 billion trade deficit. Japanese consumers would benefit from greater product options at lower costs.

In September 2019, Trump and the late Prime Minister Shinzo Abe announced a landmark agreement expanding markets for American agriculture and industrial goods while setting the gold standard on digital trade. The deal removed key barriers, enabling American farmers, ranchers and innovators to sell more goods to Japan. Today’s negotiations are far more complex.

Trump is making bold demands to open Japanese markets, backing them with threats of across-the-board and sectoral tariffs. His counterpart, Ishiba, leads a minority government facing significant political challenges and weak polling numbers heading into crucial Upper House elections this week.

Central to Trump’s strategy is the automotive sector, which accounts for over half the trade deficit. Japan has historically maintained non-tariff barriers that frustrate American automakers. Trump has threatened substantial tariffs on Japanese automotive imports to push for market access reforms.

The stakes are high given the auto industry’s importance to Japan’s economy. Major automakers like Toyota, Honda and Nissan have significant U.S. operations and employ many Americans, but the trade imbalance remains a source of tension. Trump wants reciprocal market access to address this imbalance.

American agriculture was a key beneficiary of the 2019 agreement. Japan imports substantial amounts of American beef, pork and wheat, ranking as a top five market for each. Trump is focused on further reducing Japanese agricultural import restrictions, especially on rice, considering Japan’s recent rice shortage that sent prices skyrocketing. These barriers are unnecessary for a country that already imports significant food quantities.

Trump has consistently championed American technology companies against foreign government attacks. When Canada attempted to implement a Digital Services Tax requiring U.S. tech companies to pay billions, Trump used trade leverage to force a reversal. Similarly, his administration’s pressure on the EU’s digital services tax succeeded in getting the EU to drop it.

Japan has pursued such tactics as its antitrust authorities scrutinizing American tech companies, including smartphone software providers. Trump’s negotiating team seeks clarity and assurance about fair treatment for U.S. technology firms.

The importance of reaching a deal cannot be overstated. This week, Treasury Secretary Scott Bessent will lead a Presidential Delegation to Osaka for the World Expo — an event he chose over the G20 in South Africa, signaling how crucial these negotiations are. This diplomatic prioritization reflects the strategic importance of the U.S.-Japan relationship when both nations face shared challenges from China’s economic and security posture.

Japan should seize the opportunity of Bessent’s visit to make a serious final offer on trade. Trump’s track record demonstrates his willingness to use leverage for meaningful results. His impatience with recalcitrant trading partners is clear: nations that don’t reach final agreements by Aug. 1 risk significantly higher tariffs. It’s time for Japan to come to the table and wrap up negotiations.

___

Kenneth R. Weinstein, Ph.D., is the Japan Chair at Hudson Institute. In March 2020, he was nominated by Trump to serve as U.S. Ambassador to Japan. His nomination was reported unanimously out of the Senate Foreign Relations Committee in September 2020. He also previously served on the Advisory Committee on Trade Policy and Negotiations, which provides counsel on trade agreements to the U.S. Trade Representative. Weinstein has served under the last four U.S. administrations as a member of presidentially appointed commissions.