Japan has become the ‘obvious target’ for Trump’s next trade salvo

14-Sep-2018 Intellasia | CNBC | 6:00 AM Print This Post

* Trump described his good relations with the Japanese leadership but then added: “Of course that will end as soon as I tell them how much they have to pay.”

* “There’s a US investigation into auto imports on the grounds of national security, which is a little strange. But, if you take Mexico, Canada and the EU out of it, Japan is the obvious target of that investigation into autos,” said Derek Scissors, Asia economist at the American Enterprise Institute.

* Analysts at geopolitical intelligence firm Stratfor said Japan could be insulated to some extent from US trade action because of the many Japanese production facilities in the United States.

The threat of auto tariffs is back on the agenda, and Japan could be President Donald Trump’s new “number one target.”

In a recent conversation with the Wall Street Journal, Trump described his good relations with the Japanese leadership but then added: “Of course that will end as soon as I tell them how much they have to pay.”

“The president likes to pick trade fights,” said Derek Scissors, Asia economist at the American Enterprise Institute, a conservative public policy think-tank based in Washington D.C. He added that, if a new NAFTA deal is signed with Canada and Mexico, then those countries would be exempted from the ongoing American auto investigation. Given that the European Union has already won an exemption on such tariffs, that would make Japan a key US ally in Asia “the number one target.”

“There’s a US investigation into auto imports on the grounds of national security, which is a little strange. But, if you take Mexico, Canada and the EU out of it, Japan is the obvious target of that investigation into autos,” he told CNBC’s “The Rundown.”

Although Trump may have been referring to other costs he could hit Japan with, Scissors said autos is the most likely course of action: “We have an investigation open on Japanese cars and other cars, but we haven’t taken any action along those lines.”

The Trump administration launched a national security investigation into car and truck imports in May, under Section 232 of the Trade Expansion Act. The United States is threatening to push tariffs of up to 25 percent on imported cars and parts, on top of a 25 percent tariff on steel and 10 percent on aluminum already announced.

The US administration is still deciding whether to impose the measures as part of its efforts to protect American automakers and drive down the trade deficit.

Counting the cost

Japan’s trade imbalance is the third largest of all major US trading partners, just behind China and Mexico, according to the census bureau. The $54 billion trade deficit in automobiles and parts accounts for three-quarters of that overall figure.

“A trade deficit can be cause by unfair practices, but in the Japanese case, we haven’t seen the Trump administration say what’s wrong with what Japan is doing so I think it’s a bad claim on the president’s part,” Scissors said.

https://www.cnbc.com/2018/09/07/japan-has-become-the-obvious-target-for-trumps-next-trade-salvo.html

 


Category: Japan

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