Did Japan Get Blindsided by Trump? Uproar Over 'Tariff Negotiation' Details

Japan's Reciprocal Tariff 15% Is Not 'Flat' but 'Additional'

Japan: "We Will Demand Corrections from the U.S. Regarding Terms Different from the Agreement"

Japan has gone on high alert amid the possibility that the United States' reciprocal tariffs on Japan, taking effect on the 7th, will be set as 'existing tariffs + 15%' instead of a 'flat 15%'. Expecting the same flat 15% as the European Union (EU), the Japanese government has decided to ask the U.S. for revisions.

On the 5th (local time), Ryosei Akazawa, Minister for Economic Revitalization, stated that Japan would request corrections if there are discrepancies between the actual U.S.-imposed reciprocal tariffs and the previously agreed terms. According to Nihon Keizai Shimbun, he met with reporters at an airport near Washington, D.C. that day and pointed out, "The announced U.S. reciprocal tariffs are different from what I heard from U.S. officials."

Last month, Japan and the U.S. agreed that the reciprocal tariffs imposed by the U.S. would be reduced from the previously announced 25% to 15%, and that auto tariffs would also be lowered from a total of 27.5% to 15%. At the time, the Japanese government explained that items with tariff rates below 15% would be subject to a reciprocal tariff of 15%, while items with existing tariffs above 15% would not have any further tariffs added. This was described as a special measure to reduce the tax burden.

However, the presidential executive order published by the U.S. government in the Federal Register on the 5th clearly specified that this special measure would apply only to the European Union (EU). It appears that Minister Akazawa will urge for Japan to also be included in the special measures. He is scheduled to stay until the 8th and hold talks with Howard Lutnick, U.S. Secretary of Commerce, among others.

If Japan is not included among those eligible for the special measure, South Korea will be at an advantage over Japan in export competition. This is because South Korea, having a Free Trade Agreement (FTA) with the U.S., faces no existing tariffs. With South Korea's case being '0% + 15%' and Japan's being 'existing tariffs + 15%', Korean products will become more price competitive than Japanese products in the U.S. market.

Japanese automobile manufacturers are reporting one after another poor performance due to the U.S. tariff measures. According to Honda's results announced on the 6th for the April to June quarter this year, its operating profit was ¥244.1 billion, a 49.6% decrease from the same period last year. The operating profit margin dropped from 9.0% to 4.6% in the same period.

Mazda announced the previous day that it posted an operating loss of ¥46.1 billion for the April to June period. In the same period last year, it had recorded an operating profit of ¥50.3 billion, but turned to a deficit due to the impact of the U.S. tariffs and other factors. At a press conference the previous day, Masahiro Moro, Mazda's president, described the U.S. tariffs as a "very significant practical burden" and said the company would expedite cost reductions through structural reforms.

Tokyo = Ilgyu Kim, Correspondent