Worried about new tariffs affecting 550 billion in cooperation, Japan urgently contacts the US to draw a red line: Trade agreements cannot go backward!

U.S. tariff policy continues to fluctuate, and Japan has called on the U.S. to ensure that the new round of tariffs does not impose stricter trade terms on Japan than last year's agreement.

On February 24th, according to Bloomberg, Japan's Minister of Economy, Trade and Industry, Ryo Masaharu Akazawa, had a 40-minute phone conversation with U.S. Secretary of Commerce Howard Lutnick on Monday. The Japanese Ministry of Economy, Trade and Industry subsequently stated that Akazawa made it clear: With the introduction of new U.S. tariffs, Japan’s trade conditions should not be inferior to the benchmarks established by last year’s U.S.-Japan agreement. Both sides also confirmed they will maintain close cooperation on the implementation of projects under the $550 billion investment mechanism.

The background to this negotiation is that the U.S. Supreme Court ruled last week that the Trump administration's reciprocal tariffs were unconstitutional. The White House immediately announced a new 10% tariff starting Tuesday, and Trump later threatened to raise the rate to 15%.

According to Xinhua News Agency, on the evening of February 20th, U.S. President Trump posted on social media that he had just signed an executive order imposing a 10% tariff on goods from all countries and regions, "effective almost immediately." The Japanese side is concerned that some goods subject to specific tariffs under last year’s agreement might bear additional burdens due to the new tariffs.

New Tariffs Raise Japanese Concerns Over Agreement Clauses

Under last year's U.S.-Japan trade agreement, Japan pledged to set up a fund called the "U.S./Japan Investment Instrument," investing $550 billion in the U.S. in exchange for the U.S. reducing import tariffs on Japanese cars from 27.5% to 15%.

On Tuesday, Ryo Masaharu Akazawa said in a regular press conference that some goods already enjoy a non-cumulative 15% tariff under last year's agreement, and the new tariff might add an additional burden on top of this. He reiterated, The government will continue to communicate with the U.S. to ensure Japan is not put in a more disadvantageous position due to the new tariffs. Akazawa did not disclose Lutnick's specific response in the call and noted there are currently no plans to continue negotiations in the U.S.

On the surface, The latest moves by the White House may not result in harsher conditions for Japan. The reciprocal tariff for Japanese products is locked at 15%, and if the new tariff under Section 122 of the Trade Act of 1974 is also set at 15%, Japan’s actual overall tariff rate will not change. However, given the high uncertainty in previous tariff policy rollouts, Japan remains highly vigilant.

Officials Emphasize Agreement Implementation, Reject Restarting Negotiations

Regarding the ongoing volatility in U.S. tariff policy, Japan’s Cabinet Secretary Minoru Kihara said Tuesday that the government will continue to steadily implement the current trade agreement and closely monitor the impact of subsequent developments on the agreement.

Former Japanese Defense Minister and current chairman of the Liberal Democratic Party Tax System Research Committee, Itsunori Onodera, stated on Fuji Television on Sunday that the current U.S. tariff situation is "a mess." He clearly opposes Japan restarting negotiations on the U.S.-Japan trade agreement.

He pointed out, The core issue of last year's trade agreement was reducing automobile tariffs. As Japan’s largest export pillar, the automotive industry is vital for employment and investment. He said:

"If renegotiation leads to an impact on automobile tariffs, it would not be worth the trouble."

Advancing Investment Projects, Maintaining Bilateral Cooperation Framework

On the investment mechanism front, Trump announced last week the first batch of projects, including data infrastructure, a deep-sea oil terminal, and a synthetic diamond manufacturing facility for semiconductors. All announced projects are currently located in the U.S.

The Japanese Ministry of Economy, Trade and Industry stated that both sides reaffirmed they would continue to advance the already agreed-upon trade deal with integrity and speed. Ryo Masaharu Akazawa and Howard Lutnick also reached consensus in their call on accelerating relevant projects under the $550 billion investment mechanism.

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