US and Japan sign limited trade deal

Edmund Heaphy
·Finance and news reporter
Updated
President Donald Trump points to Japanese Ambassador to the United States Shinsuke Sugiyama, left, as U.S. Trade Representative Robert Lighthizer, center, watches at the end of a signing ceremony for a trade agreement with Japan in the Roosevelt Room of the White House, Monday, Oct. 7, 2019, in Washington. (AP Photo/Evan Vucci)
US president Donald Trump with Japanese ambassador to the US Shinsuke Sugiyama on Monday. Photo: AP Photo/Evan Vucci

The US and Japan on Monday signed a trade agreement that will see the Asian country open its markets to $7bn (£5.7bn) worth of American agricultural goods.

Though the pact also includes $40bn worth of digital trade commitments, it falls short of the Trans-Pacific Partnership that the Trump administration withdrew from in early 2017.

The deal, which was agreed in September by US president Donald Trump and his Japanese counterpart Shinzo Abe, also does not address the thorny issue of auto tariffs.

Automakers in Japan had hoped that 2.5% tariffs on Japanese cars would be eliminated as part of the agreement. Though Japan secured a commitment that they would not increase further, the text of the agreement contains no explicit assurances.

Following the announcement of the deal in September, Trump trade adviser Robert Lighthizer said that new tariffs on Japanese cars were unlikely.

The deal cuts Japanese trade barriers to American beef, pork, wheat, cheese, wine, and almonds, among other goods. It also reduces US tariffs on Japanese turbines, machine tools, bicycles, green tea, and flowers, among other products.

The lowering of tariffs will be a boost to farmers, whose businesses have been severely dented by the US trade war with China.

“This is a huge victory for America’s farmers, ranchers and growers. And that’s very important to me,” Trump said at a ceremony in the White House.

Within days of becoming president, Trump pulled the US out of the Trans-Pacific Partnership, a multilateral trade deal that would have given the country greater access to countries like Japan, Australia, Vietnam, and Singapore.

Though farmers welcomed the deal, it had been widely criticised on both sides of the political spectrum.

Japan had until recently rebuffed trade talks with the US, insisting that the country rejoin the previously agreed partnership. But accelerated trade talks between the US and Japan began in July and preliminary agreement was reached in August.

The signing of the deal will be a boost to the Trump administration, whose trade negotiations with other countries have progressed in fits and starts.

The US on Tuesday banned the US from exporting American-made products to 28 Chinese companies and organisations, in a move that is only likely to inflame the trade war with China.

And last week, the US levied new tariffs on billions of European Union imports, such as Scotch whisky.