Japan and US still far apart in tariff talks, says Japanese Prime Minister

Japanese Prime Minister Shigeru Ishiba still sees distance with the US when it comes to trade talks, according to an opposition party leader who met with the leader to discuss US tariffs.

Ishiba is expected to meet US President Donald Trump on the sidelines of the Group of Seven leaders gathering in Canada starting Sunday. Ahead of that potentially key meeting, the prime minister gathered with opposition party leaders Thursday to canvass their thoughts on the American levies.

Speaking to reporters after the gathering, Japan Innovation Party co-leader Seiji Maehara said that Ishiba said there is a large gap between the US and Japanese stances, and that he doesn’t have a particular timeline in mind for when the two sides may come to an agreement.

“If there’s progress before I meet the president, that’s in and of itself good,” Ishiba told reporters in Tokyo Thursday. “But what’s important is to achieve an agreement that’s beneficial to both Japan and the US. We won’t compromise Japan’s interests by prioritising a quick deal.”

The upcoming summit gathering in Canada is viewed as a potential moment for Japan and the US to reach some kind of an agreement after two months of back-and-forths. Failing to get any kind of deal there could worsen Ishiba’s standing ahead of a national election next month as the tariffs threaten to push Japan’s economy into a technical recession.

Maehara and Yuichiro Tamaki, head of the Democratic Party for the People said that Ishiba also mentioned the US and Japan are discussing Japan’s US Treasuries holdings, without elaborating on details. Tamaki told Ishiba that Japan could help US yields stabilize by reinvesting in US bonds — specifically by buying longer-term bonds when current holdings mature.

Japan remains the biggest foreign holder of US Treasuries. In early May, Finance Minister Katsunobu Kato’s remarks that suggested US Treasuries could be used as a negotiating tool drew great market interest, but later Kato appeared to walk back those comments and in particular the idea that Japan might use the sale of US Treasuries in negotiations.

Trump raises pressure

While Japanese party leaders continued to discuss the tariffs’ impact, Trump appears to be ramping up pressure.

The US president said he intended to send letters to trading partners in the next one to two weeks setting unilateral tariff rates, ahead of a July 9 deadline to reimpose higher duties on dozens of economies. For Japan, an across-the-board tariff is set to increase to 24% from 10% on that day barring a deal.

The Asian nation is trying to earn a reprieve from a 25% tariff on cars and car parts and a 50% levy on steel and aluminum. Ishiba’s top trade negotiator Ryosei Akazawa is expected to travel to North America later this week for the sixth round of negotiations with his counterparts.

Still, in a different debate with opposition party leaders held in parliament on Wednesday, Ishiba hinted at how quickly the situation could change.

“The final decision is made by the president. There are many instances when the deal is sealed in that final moment,” Ishiba said when asked by the leader of the largest opposition party how far along trade talks were. “There is no doubt that talks are progressing.”