TOKYO — When Ryosei Akazawa, Japan’s chief trade negotiator, departed Tokyo on Monday morning for the latest round of tariff discussions in Washington, he left behind a nation in political turmoil and bracing for a new jolt of economic pain.
Akazawa’s party, the Liberal Democrats, had suffered a crushing defeat in elections the previous day, rendering it a minority governing party in both houses of parliament.
Japan was also barreling toward an Aug. 1 deadline to reach a trade agreement with the United States. The Trump administration had vowed to impose a punishing 25% blanket tariff on Japanese goods shipped to the United States — the largest buyer of its exports.
The successful negotiation of a deal was widely seen as critical to the political survival of Shigeru Ishiba, Japan’s prime minister and a longtime ally of Akazawa. But after more than three months and seven rounds of tariff negotiations, few trade experts were expecting a deal to come to fruition.
Turns out the eighth time was the charm.
In a social media post late in the U.S. evening on Tuesday, President Donald Trump declared that he had reached a “massive” trade deal with Japan. Japan had agreed to open its markets to more imports of American cars and rice, as well as invest $550 billion in the United States, he said.
In return, the president said that Japanese exports to the United States would be charged a tariff of 15%, lower than the 25% he was previously threatening. Critically, Japanese officials later said, car and auto part exports would be subject to a 15% tariff, lower than a separate and damaging 25% tariff that Trump had already imposed on the sector.
Shortly after Trump’s social media announcement, Akazawa followed up with his own post: “#mission accomplished.” In the end, Japan reached a deal that “protected its national interests,” Akazawa said. This was because of its strategy of pushing negotiations along without giving away too much — a tactic he called “hurrying slowly.”
The clinching of a trade deal between the United States and Japan, its biggest foreign investor, was a striking turnaround for two nations that just days earlier appeared to be far apart.
Trade experts said the terms of the deal were relatively generous from the Trump administration because Japanese officials were in a weakened position after their election drubbing days earlier. For Japan’s part, the concession by Trump to lower the auto tariffs — albeit to a higher rate than the 2.5% previously in place — probably helped seal the deal.
“Japan ended up getting a pretty good deal after all of the drama of recent weeks,” said David Boling, the director for Japan and Asian Trade at Eurasia Group, a political consultancy. “Is the agreement ideal? Obviously not. And tariffs are going to have an impact on the economy,” he added. “But it’s better than what people thought Japan would be able to get just yesterday.”
Although details of the last-minute decisions that brought Japan and the United States to an agreement remain sparse, timing probably played a role for both sides.
The Trump administration is facing mounting pressure to achieve trade deals before Aug. 1, when steep tariffs on imports from numerous countries are slated to take effect. Deals with other major trade partners, including the European Union, have been slow-moving.
And it was probably easier for Japan to agree to a deal after the national elections Sunday.
Since tariff negotiations between Japan and the United States began in April, the Trump administration had consistently pushed Japan to provide broader market access for American products like cars and rice, and to accept the 25% tariff on its auto exports.
However, before the recent elections, the Japanese electorate had signaled its opposition to Japan making substantial sacrifices for a trade deal. Ishiba and other Liberal Democrat leaders echoed this sentiment, repeatedly asserting that they would protect domestic agriculture and that they wanted the tariffs on vehicle exports removed entirely.
At the same time, Japanese officials faced the pressing threat that a failure in trade negotiations could initiate across-the-board tariffs. Such measures would not only erode the profits of major Japanese exporters like Honda, Nissan and Toyota but also potentially exacerbate underlying weaknesses in the Japanese economy.
In recent weeks, some influential advisers to Japan’s governing party had suggested that it accept some tariffs on car exports to help shield other industries from blanket taxes, according to two people involved in the conversations, who spoke on the condition of anonymity to discuss private interactions.
After the elections, Japanese officials found themselves having to “scramble to put together a package that they thought would satisfy the Trump administration,” said Glen S. Fukushima, a former trade official and ex-president of the American Chamber of Commerce in Japan.
This package offered up by Akazawa was primarily aimed at “helping Trump claim that he’s had a historic victory,” Fukushima said. “They certainly didn’t want to do that before the election because it could have led to Ishiba and the Liberal Democratic Party losing votes,” he said.
In a news conference Tuesday, Akazawa said Japan would provide up to $550 billion in investments and loans in the United States focused on areas such as pharmaceuticals and semiconductors.
Japan would allow the import of American-made cars without the unique safety standards and testing it usually requires, accept the 15% tariff on its car exports, and find ways to secure more American rice without altering existing tariff policies, he said.
This article originally appeared in The New York Times. Photo courtesy of Cheriss May. River Akira Davis originally wrote this article. Kiuko Notoya and Hisako Ueno contributed to the reporting and publication of this article.
