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Japan’s Akazawa to Visit US, Push for Start of Lower Car Tariffs

(Bloomberg) -- Japan’s top trade negotiator Ryosei Akazawa will visit the US this week to press Washington to implement lower the tariffs agreed in July including lower duties on cars and auto parts.

His latest visit, starting Thursday, will be the 10th since the start of bilateral trade talks this year. Even though both sides struck a deal in July, the US has yet to deliver what it promised to do.

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Japan wants the US to cut its tariffs on cars and car parts to 15% and to end the stacking of previous duties on 15% universal tariffs. Those demands require US President Donald Trump to issue an executive order on the car tariffs and amend his previous order on the across-the-board levies.

“The revision of reciprocal tariffs and the cut of auto tariffs are expected to take place simultaneously,” Akazawa said at a press conference in Tokyo on Wednesday evening.

“We urge them to be realized as soon as possible, even a day sooner, or even a moment sooner,” he said. Akazawa plans to return to Japan on Saturday.

Securing a favorable response to the demands would likely be a win for Japan as Akazawa has made mention of the US-UK trade pact and how it took 54 days to take effect, hinting that the deal with the US reached on July 22 might not take effect until mid-September.

Meanwhile, the US wants to see a $550 billion investment mechanism, a pillar of the deal, up and running so that the Trump administration can use it to help revive American manufacturing. Commerce Secretary Howard Lutnick signaled that an announcement related to the investment vehicle is due later this week.

Details of how the fund will operate remain largely unknown. Akazawa has largely played down the scale of direct investment through it and how the proceeds would be shared 90:10 with the US. There hasn’t been a joint document detailing the trade deal.

Like Japan, South Korea sealed a trade deal with the US at the end of July including a $350 billion fund for projects in the US as a key element. This week, South Korean firms revealed plans to invest $150 billion in the US, in addition to the fund as President Lee Jae Myung met with Trump in Washington.

If the stacking of duties is addressed, Japan would see its 15% reciprocal tariff rate incorporate existing most-favored nation levies, as is the case with US tariffs on the European Union. Akazawa has said the US would refund any overpaid tariffs.

While the impact of the stacking was expected to be minor, it still led to criticism of Prime Minister Shigeru Ishiba and his handling of the deal. Ishiba has vowed to stay on despite a historic election setback for his ruling party partly in order to ensure the trade deal is fully implemented.

More importantly, Japan wants the lower car tariffs to kick in as soon as possible as the sector accounts for the biggest chunk of its exports to the US. The Japanese economy grew faster than expected last quarter, but overall exports are continuing to fall due to the US tariffs.