US allies continue to await tariff relief despite the swift resolution with China
The United States swiftly negotiated a trade agreement with its primary geopolitical competitor. Achieving consensus with longstanding allies is increasingly becoming a protracted process. The United States compiled a list of 18 essential trading partners to prioritize in negotiations after President Trump’s tariff initiative on April 2, during which he imposed “reciprocal” tariffs on nearly all imports into the country.
However, apart from a brief accord with the U.K. and the recent tariff rollback with China, none have produced the significant breakthrough necessary to alleviate the burdensome import levies. For several of the most significant targets on that list, including Japan, South Korea, and the European Union, a notable point of contention is automobiles. The United States has, to date, shown hesitance in abolishing a significant 25% tariff on imported automobiles, a measure that disproportionately affects its allies. The U.K. achieved a reduction in auto tariffs through its swift agreement with U.S. negotiators; however, this concession applies solely to the initial 100,000 vehicles imported annually, a figure significantly lower than the volume produced by major car manufacturers that enter the U.S. market each year.
This month’s earnings reports revealed that Toyota, Honda, and Nissan attributed their downgraded profit forecasts to tariffs. Additionally, data released on Friday indicated that Japan’s economy contracted in the first quarter, highlighting its susceptibility to a decline in exports. Japan’s chief trade negotiator, Ryosei Akazawa, indicated that Japan continues to pursue the elimination of all tariffs recently imposed by Trump, which encompass those on automobiles and steel, in addition to the fundamental 10% “reciprocal” tariff. He referred to these levies as “deeply regrettable.”
Seoul is pursuing a tariff exemption, with its trade minister convening on Friday on South Korea’s Jeju Island alongside U.S. Trade Representative Jamieson Greer. Highlighting that the local auto-parts sector generates approximately 330,000 jobs, South Korea’s minister for small and midsize enterprises has recently committed to providing support to mitigate the impact. Trade officials representing various EU member states indicated their intention to advocate for a more favorable agreement compared to the one established by the U.K. with the U.S., which maintained tariffs on the majority of goods. “I don’t think that’s the level of ambition Europe would be happy with,” stated Michał Baranowski, Poland’s deputy economy minister.
On April 2, Trump announced plans to impose steep new tariffs on both U.S. allies and adversaries, with the objective of addressing the significant trade deficit and revitalizing U.S. manufacturing. Japan was subjected to a tariff of 24%, whereas the European Union faced a tariff of 20%. The Trump administration indicated that the tariffs were indicative of not only the tariffs imposed by other nations on U.S. imports but also burdensome regulations and various nontariff barriers. The tariff imposed on South Korea was established at 25%, whereas the United Kingdom, with which the United States maintains a trade surplus, received the standard 10% rate that Trump aims to establish as a minimum for nearly all U.S. imports.
Shortly after the announcement of the new levies, the White House declared that the majority of these tariffs would be put on hold for a period of 90 days, whereas tariffs on automobiles and steel would continue to be enforced. A surge in efforts to secure more favorable conditions commenced. Japan was the first nation to initiate discussions, with officials expressing optimism for a swift agreement. Trump has often expressed his admiration for former Prime Minister Shinzo Abe, who gifted him a golden golf club following his presidential victory in 2016. Abe’s widow made a visit to Mar-a-Lago late last year in the wake of Trump’s second election victory, while the current prime minister, Shigeru Ishiba, was among the first global leaders to engage with the White House following inauguration day.
In contrast to China, Japan refrained from retaliatory measures in response to Trump’s tariffs, and Ishiba has exercised caution in publicly criticizing the president. “The Japanese are very careful to not have Trump lose face,” stated Shihoko Goto of the Washington-based Mansfield Foundation. Yorizumi Watanabe, president of Fuji Women’s University in Japan and a former leading Japanese trade negotiator, indicated that Tokyo ranks among the countries most vulnerable to U.S. influence. “Japan is perhaps the most straightforward to negotiate with due to our complete reliance on the U.S. market and U.S. defense,” he stated.
Concurrently, he remarked that Japan remains cautious about conceding too much in negotiations. In 2019, during the first term of the Trump administration, a trade agreement was established with the U.S., whereby Japan reduced tariffs on certain American agricultural products, including frozen beef and pork. Concurrently, the U.S. reciprocated by lowering tariffs on select Japanese goods, such as machine tools. Trump has demonstrated through the imposition of numerous new tariffs that he does not regard the 2019 agreement with Japan as binding, similar to how he disregarded the U.S.-Mexico-Canada agreement that he negotiated during his initial term.
In Tokyo, that reversal was felt acutely. “Even assuming we reach a new agreement built on a win-win relationship, it’s important to reaffirm that they’re going to observe the rules fully this time,” stated Yoshihiko Noda, leader of the opposition Constitutional Democratic Party, during an interview. Trade specialists suggest that Japan might propose to enhance its imports of American automobiles and synchronize its vehicle safety regulations with those of the United States. It may suggest an increase in purchases of corn and other agricultural products, now incorporating rice, which was omitted from discussions in 2019. Japan’s shipbuilding expertise presents an opportunity for the U.S. Navy and could facilitate the revitalization of the long-dormant U.S. industry, aligning with priorities set during the Trump administration.
There exist obstacles beyond tariffs. Analysts suggest that certain U.S. trading partners may resist requests to relax economic connections with China or consent to allow their currencies to strengthen against the dollar. Nonetheless, the agreement between the U.S. and China established in Geneva provides an opportunity for Trump’s administration to redirect its focus toward other nations. “I’ve been focused on the Asia deals, of which obviously China is the largest,” Treasury Secretary Scott Bessent stated on Tuesday. “We’ve had very productive discussions with Japan,” he stated, further noting that across Asia “things are going very well.”
