US and Japan Face Diplomatic Test as Dual Negotiations on Currency and Tariffs Begin

Extension of Trump-Era Pressure... Tariff Talks to Resume After the 23rd
Bassent and Akazawa Divide Roles: Pressure and Defense
Japan: "Importing U.S. Cars 72 Times More? Far from Reality"

The United States and Japan will hold a separate finance ministers' meeting during the Group of Seven (G7) Finance Ministers and Central Bank Governors' Meeting, which begins in Canada on May 20.

On May 1st in Washington DC, Ryosei Akazawa, Japan's Minister for Economic Revitalization (right in the photo), posed with Scott Bassent, U.S. Secretary of the Treasury (center in the photo), and Howard Lutnick, Secretary of Commerce (left in the photo). Photo by AFP Yonhap News

According to Kyodo News on May 20, U.S. Treasury Secretary Scott Bassent and Japanese Finance Minister Katsunobu Kato are scheduled to hold a bilateral meeting to exchange views, with a particular focus on currency issues.

This meeting is a follow-up to the first round of talks held on April 24 in Washington DC. At that time, Minister Kato stated that "there was no mention from the U.S. side regarding currency levels, targets, or management systems," but both countries agreed to continue consultations on currency-related matters.

This meeting demonstrates that trade issues between the United States and Japan are being discussed in parallel along two tracks: currency and tariffs. In particular, there is heightened interest in the outcome of the currency consultations, given that former President Donald Trump has repeatedly raised concerns about the weakness of the Japanese yen in the past.

Meanwhile, the third round of U.S.-Japan tariff negotiations is expected to be held in the United States after May 23, immediately following the G7 meeting. To prepare for this, Japan's chief negotiator, Ryosei Akazawa, Minister for Economic Revitalization, is scheduled to visit the United States starting May 22, while working-level discussions have already begun on May 19 local time in the U.S.

Treasury Secretary Bassent will not attend this round of negotiations. Instead, the U.S. delegation will be led by Jamison Greer, a representative of the U.S. Trade Representative (USTR), among others. The Japanese government has reiterated its position that it finds the U.S. tariff measures "deeply regrettable" and continues to strongly demand their removal.

At the second round of U.S.-Japan tariff negotiations held on May 1, Japan requested a comprehensive review of the Trump administration's tariff policies, including those on automobiles. However, the U.S. insisted on limiting the discussions to reciprocal tariffs only.

Meanwhile, the Nihon Keizai Shimbun reported that the U.S. trade deficit with Japan reached approximately 9.0048 trillion yen (about 86.8 trillion won) last year. To resolve this deficit, Japan would need to increase its imports of U.S.-made automobiles by 72 times the current level, which would account for one-quarter of Japan's annual new car sales.

Currently, U.S.-made vehicles account for less than 1% of total car sales in Japan, leading analysts to conclude that it would be extremely difficult to meet the demands made by the Trump administration.