United States And Japan Reach “Mini” Trade Pact That Could Go Into Effect In January 2020
The United States and Japan last week reached a “mini” trade deal that promises to open up Japanese markets to approximately $7 billion worth of U.S. products annually by cutting Japanese tariffs on American beef, pork, wheat and cheese.
The agreement does not affect the United States’ Section 232 tariffs on steel and aluminum.
Both nations are hopeful the pact could lead to a larger, more expansive one that will deal with other products, however.
Although the “mini” agreement does not cover trade of automobile and auto parts, according to Politico, Japanese Prime Minister Shinzo Abe said President Donald Trump “firmly confirmed” in a meeting last Wednesday that Japan would not face the threat of tariffs on autos and auto parts.
U.S. Trade Representative Robert Lighthizer also addressed that issue. He promised that, “at this point, it is certainly not our intention, the president’s intention, to do anything on autos, on 232s, on Japan.” The two leaders also agreed in a joint statement that both nations “will refrain from taking measures against the spirit of these agreements and this joint statement” as long as the two sides “faithfully implement” the deals.
The agreement, which requires the approval of Japan’s legislature, but not the approval of Congress, is expected to go into effect on January 1, 2020. With $217.6 billion in goods and services traded between the two countries in 2018, Japan is the United States’ fourth largest trading partner. The U.S. exported $120.4 billion in goods and services to Japan in 2018.
The Metals Service Center Institute has not taken a position on a potential trade deal with Japan. Click here to visit MSCI’s principles for trade and currency manipulation.