Donald Trump said Japan would accept imports of Ford’s huge F-150 pickup trucks, in the latest sign that the two countries are at odds in their understanding of a trade agreement the U.S. President announced last month.
His comments came as Tokyo’s top negotiator headed to Washington to press the Trump administration to follow through on a pledge to reduce tariffs on cars and car parts to 15% from the current crippling 27.5%.
“They’re taking our cars,” Trump said of Japan in a phone interview broadcast by CNBC on Tuesday. “They’re taking the very beautiful Ford F-150, which does very well. And I’m sure we’ll do very well there and other things that do very well here, will also do well there.”
Confusion hangs over various details of a trade deal struck between the U.S. and Japan, sparking concern in Japan over its enforcement, particularly regarding cars. The Trump administration’s rhetoric over trade deals has often shown discrepancies with its partners, casting doubt over their viability.
“There are all sorts of debates over the tariffs, but we have reached an agreement,” Japan’s Prime Minister Shigeru Ishiba said during a press conference held in Hiroshima on Wednesday. “As stated by U.S. government officials involved in previous U.S.-Japan trade negotiations, it is much, much more difficult to implement the deal than agree on it.”
U.S. auto tariffs on Japan are now set at 27.5%—a combination of a previous 2.5% rate and a new 25% applied by Trump. Although a cut to 15% would lessen the blow, that rate would still impact a sector that has long been a mainstay of Japan’s economy.
“It’s worth noting that the U.S.-UK agreement took 54 days to be implemented,” Japan’s negotiator Ryosei Akazawa told reporters when asked about the lowering of auto tariffs after arriving in Washington on Wednesday morning Japan time.
Asian markets were hopeful that Akazawa’s ninth visit to the U.S. would solifidy the promise on lower auto tariffs, with Japan’s Topix Index rising 1% on the back of carmakers including Toyota Motor Corp..
Another question is whether the across-the-board 15% tariff is stacked on top of existing rates or whether all current levies will be standardized to 15%, in another potential divergence of the U.S. and Japan’s understandings of the trade deal.
Although Akazawa has claimed that levies will be cut off at 15% rather than added on top of current rates, an executive order released last week indicated that the 15% cut off applied only to the European Union and would not be implemented for Japan.
“There are many details involved with this tariff rate, so we are seeking to discuss these points in detail,” Akazawa added.
While Trump has long lamented the fact that U.S. cars are unpopular in Japan, most experts agree that is due to the lack of vehicles suitable for the market, rather than any barriers to trade.
The Ford F-150 that Trump mentioned in the interview is more than two meters wide even without mirrors, likely limiting its usefulness on Japan’s roads, many of which are less than four meters wide for two car lanes, according to government data released in 2012. Around half of Japan’s households own a smaller class of car that’s less than 1.5 meters wide, to better navigate narrower roads.
In the same interview with CNBC, Trump called the $550 billion investment package agreed with Japan in the trade deal a “signing bonus” much like that of a baseball player.
“I got a signing bonus from Japan of $550 billion. That’s our money. It’s our money to invest as we like,” he said.
The Japanese side has said only 1% to 2% of the overall amount will be actual investment, with the rest being loans and loan guarantees. Japanese Prime Minister Shigeru Ishiba has said that the investments will be made at the behest of private companies, and benefit both Japan and the U.S.
“The agreement is about building up a supply chain within the United States,” Akazawa said when asked to explain the difference in how the investment program has been touted by the U.S. and Japan. “The promise is that Japan will invest in the U.S. when there are benefits for Japan.”
