US allies are still waiting for tariff relief even after speedy China truce

Talks with Japan, South Korea and the European Union have bogged down over auto tariffs and the U.S. reneging on past deals.

Jason Douglas, Timothy W. Martin( with inputs from The Wall Street Journal)
Published18 May 2025, 10:49 AM IST
US trade truce with China was fast, but deals with allies like Japan, EU, S. Korea stall over auto tariffs. (Image: AFP)
US trade truce with China was fast, but deals with allies like Japan, EU, S. Korea stall over auto tariffs. (Image: AFP)

The U.S. hammered out a trade truce with its foremost geopolitical rival in record time. Reaching agreement with longtime allies is proving more of a slog.

The U.S. drew up a list of 18 key trading partners to focus on in negotiations following President Trump’s April 2 tariff blitz, when he slapped “reciprocal” tariffs on almost all U.S. imports.

Yet aside from one quick agreement with the U.K. and now the tariff rollback with China, none have so far yielded the kind of breakthrough that would bring relief for painful import levies.

For some of the biggest targets on that list, such as Japan, South Korea and the European Union, one sticking point is cars. The U.S. has so far been reluctant to drop a crippling 25% tariff on imported autos, which particularly hits these allies.

The U.K. did secure a lower auto tariff in its rapid-fire agreement with U.S. negotiators—but only on the first 100,000 vehicles imported each year, far fewer than the carmaking powerhouses send to the U.S. each year.

In earnings reports this month, Toyota, Honda and Nissan blamed tariffs for souring profit forecasts, while data Friday showed Japan’s economy shrank in the first quarter, underlining its vulnerability to an export decline.

Japan’s top trade negotiator, Ryosei Akazawa, said Japan was still seeking the removal of all tariffs Trump has recently imposed, including those on autos and steel as well as the baseline 10% “reciprocal” tariff. He called these levies “deeply regrettable.”

Seoul is also seeking an exemption from tariffs and its trade minister met Friday on South Korea’s Jeju Island with U.S. Trade Representative Jamieson Greer. Noting the local auto-parts industry creates about 330,000 jobs, South Korea’s minister for small and midsize businesses recently pledged support to minimize the damage.

Trade officials from several EU member states said they would push for a better deal than the one the U.K. reached with the U.S., which left tariffs in place for most goods. “I don’t think that’s the level of ambition Europe would be happy with,” said Michał Baranowski, Poland’s deputy economy minister.

Trump on April 2 announced plans to hit U.S. allies and adversaries alike with steep new tariffs aimed at reining in the U.S.’s yawning trade deficit and rebuilding U.S. manufacturing.

Japan received a 24% tariff, while the EU got 20%. The Trump administration said the tariffs reflected not just other countries’ tariffs on imports from the U.S. but also onerous regulations and other nontariff barriers.

The levy on South Korea was set at 25%, while the U.K., with which the U.S. runs a trade surplus, got the baseline 10% rate that Trump wants to be a floor on almost all U.S. imports.

Days after announcing the new levies, the White House decreed most of those new tariffs would be suspended for 90 days, while car and steel tariffs remained in force. A rush to negotiate better terms began.

Japan was the first country out of the block to start talks, and officials were hoping for a quick deal.

Trump has frequently spoken of his regard for former Prime Minister Shinzo Abe, who presented him with a golden golf club after he won the presidency in 2016. Abe’s widow visited Mar-a-Lago late last year following Trump’s second election victory, and the current prime minister, Shigeru Ishiba, was one of the first global leaders to visit the White House after inauguration day.

Unlike China, Japan didn’t retaliate against Trump’s tariffs and Ishiba has been careful to avoid public criticism of the president.

“The Japanese are very careful to not have Trump lose face,” said Shihoko Goto of the Washington-based Mansfield Foundation.

Yorizumi Watanabe, president of Fuji Women’s University in Japan and a former top Japanese trade negotiator, said Tokyo was among the nations most susceptible to U.S. pressure.

“Japan is maybe the easiest one to negotiate because we are totally dependent on the U.S. market and also U.S. defense,” he said.

At the same time, he said, Japan is wary of giving too much away in talks. It already signed a trade pact with the U.S. in 2019 during Trump’s first term in which Japan lowered tariffs on some U.S. agricultural products, such as frozen beef and pork, while the U.S. lowered tariffs on some Japanese goods such as machine tools.

Trump has shown by levying a host of new tariffs that he doesn’t consider the 2019 deal with Japan binding, much as he dispensed with the U.S.-Mexico-Canada agreement he also negotiated during his first term.

In Tokyo, that about-face stung. “Even assuming we reach a new agreement built on a win-win relationship, it’s important to reaffirm that they’re going to observe the rules fully this time,” Yoshihiko Noda, leader of the opposition Constitutional Democratic Party, said in an interview.

Trade experts say Japan could offer to increase imports of U.S. cars and align its car-safety standards with America’s. It could propose buying more corn and other agricultural products, this time including rice, which was excluded from 2019 talks. Japan’s shipbuilding expertise could help the U.S. Navy and rebuild the long-dormant U.S. industry, a Trump priority.

There are hurdles other than tariffs. Analysts say some U.S. trading partners might balk at demands to loosen economic ties with China, or agree to let their currencies appreciate against the dollar. Still, the U.S.-China deal reached in Geneva clears some space for Trump’s team to turn its attention to other countries.

“I’ve been focused on the Asia deals, of which obviously China is the largest,” Treasury Secretary Scott Bessent said Tuesday. “We’ve had very productive discussions with Japan,” he said, adding that across Asia “things are going very well.”

Write to Jason Douglas at jason.douglas@wsj.com and Timothy W. Martin at Timothy.Martin@wsj.com

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