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September 23, 2019

Have U.S. And Japan Reached A Trade Deal? President Trump Says They Have

Last Monday, President Donald Trump announced that his administration has struck a partial trade deal with Japan on tariff barriers and digital trade and that the two countries will formally enter into the agreement in the “coming weeks.”

His administration also formally notified Congress of its plans. The message to lawmakers said the administration also looks forward to continued collaboration with Congress for a “comprehensive” trade agreement with Japan.

President Trump and Japanese Prime Minister Shinzo Abe will meet this week in New York on the sidelines of the United Nations General Assembly, reportedly to hammer out the final contours of the agreement.

White House economic adviser Larry Kudlow was slightly less definitive than the president, but said, “There just might be an announcement at the United Nations … You can never tell, but I’m an optimist.”

The White House has not released many details about the deal, and House and Senate lawmakers last week also said the Trump administration has not shared much information with them. According to Politico, Senate Finance Committee Chairman Chuck Grassley (R-Iowa), who oversees trade policy for the chamber, reacted positively to the news despite not having specifics. He said it was “very good news” for American farmers and “probably makes up for about 90 percent of what we lost by not being” in the Trans-Pacific Partnership (the multilateral trade deal with Asian national that President Donald Trump pulled out of shortly after entering office).

Sen. Grassley also urged the Trump administration to continue working toward a broader agreement that “benefits all sectors of the American economy.”

Among the question marks regarding the agreement: President Trump did not make clear whether he plans to end his threat of imposing auto tariffs on Japan, a key objective for Prime Minister Abe. Indeed, according to Reuters, Japanese officials said late last week that, before moving forward, they need a written guarantee from the president that he will not move forward with penalties on Japanese autos and auto parts.

In related news: European officials last week also weighed in on auto tariffs. European Trade Commissioner Cecilia Malmstrom reiterated her previous pledge to impose retaliatory tariffs on the United States if President Donald Trump follows through on his plan to impose tariffs on European automotive goods with duties.