Who will be the loser in US-Japan trade talks?

Brendan Smilalowski | AFP | Getty Images

Japan’s Prime Minister Shinzo Abe and US President Donald Trump wait for a meeting in the Oval Office of the White House on February 10, 2017 in Washington, DC.

However, we can expect tough negotiations with Trump pushing for a deal that favors the U.S. and any new agreement likely to be very different from the TPP.

The question is: Will Japan be forced to sign an agreement much less advantageous than the previous arrangement? There is strong speculation that this will be the case, adding to Prime Minister Abe’s current series of headaches.

Since President Trump took office in January, there have been increasing concerns that Japan’s continued trade surplus with the U.S. will drive the White House’s protectionist outlook. In the fourth quarter of 2016, Japan’s economy growth was buoyed by exports of electronic devices and other IT products to China and the rest of Asia, rather than the U.S.. However, should Japanese automobile exports to the U.S. continue to rise and expand Japan’s trade surplus with the U.S., we may yet see protectionist pressures grow. This won’t be a good position for the Japanese economy to find itself in, given its heavy reliance on exports.

Top level U.S.-Japan talks on economic issues are expected to be held between Deputy Prime Minister Taro Aso and Vice President Mike Pence in April. However, top U.S. trade advisor, Peter Navarro, has already stated that trade between certain nations are not mutually beneficial, mentioning the U.S. trade deficit with Germany, Japan’s non-tariff barriers, and the undervalued Chinese yuan as examples. It is not certain which Japanese non-tariff barrier he was referring to, but there is a chance that the U.S. will demand revisions in order to improve the…

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