Japan and the US Engage in Trade Discussions as Automotive Industry Concerns Rise

A recent publication by Bloomberg highlights that Japan and the U.S. have kicked off a new phase of trade talks.Reports indicate that Tokyo is seeking to ease tariffs by committing to increase car production within the U.S. and strengthen collaboration on rare earth elements.

The chief negotiator for Japan,Ryosei Akazawa,met with U.S. Commerce Secretary howard Lutnick on June 5 in Washington D.C., where thay discussed non-tariff barriers and strategies for enhancing trade relations while ensuring economic security, according to a statement from Japan’s Cabinet secretariat. Akazawa is set to return home on June 8 after what might potentially be one of the final high-level discussions before G7 leaders gather for their summit in Canada later this month.

There’s growing anticipation that Japanese Prime Minister Shigeru Ishiba and U.S. President Donald Trump might unveil an agreement during their upcoming meeting at the summit following two recent phone conversations.

Akazawa pressed lutnick to reconsider existing tariffs imposed by the U.S., which include a hefty 25% tax on cars and parts—a stance Tokyo has maintained since these measures were introduced under trump’s management. This week also saw an increase in steel and aluminum tariffs from 25% to a staggering 50%, with plans for an overall tariff hike from 10% to nearly double that amount come July unless negotiations yield results.

The Japanese government has suggested a plan where the car tariff would decrease as production levels rise at Japanese facilities within America, along with increased exports of those vehicles—an idea reported by Asahi newspaper citing anonymous officials involved in discussions.

This ongoing tariff situation is already impacting Japan’s economy; there was a notable decline in car exports to the U.S. last April, raising concerns about potential recession risks following earlier economic contractions this year.

Citing data from Nikkei

The topic of rare earth minerals has emerged prominently during these negotiations as Akazawa emphasized its importance for national economic security after previous talks concluded. He mentioned it as “undoubtedly critical.”

Nikkei reported on June 5 that Japan intends to propose enhanced cooperation with the Trump administration regarding rare earths and liquefied natural gas (LNG) supplies—aiming particularly at mitigating tensions related to china over these resources.

This isn’t just about current negotiations; back in 2010, China restricted rare earth exports amid political tensions with Japan, prompting both industries and government entities within Japan to actively seek alternative supply sources globally—including investments into Australian mining operations—to lessen dependency on Chinese materials moving forward.