The U.S.-Japan Tariff Negotiations Are Expected to Unravel a Key Mystery: What Is Trump's Intent in Disrupting Global Trade?

As the Trump administration is expected to hold tariff negotiations with the visiting Japanese delegation this week, a key issue troubling the global market will also face resolution: What exactly does the US government aim to "extort" from its global trading partners amidst the historic chaos it has created?

As a long-term ally of the US and a country that signed the Plaza Accord in 1985 to address the US trade deficit, Japan has been subjected to a 24% "reciprocal tariff" by the Trump administration, currently under a 90-day suspension, but the 10% general tariff remains effective, while the 25% auto tariff severely impacting Japan's economy has already taken effect.

Japan issued its toughest statement to date: No rush to reach an agreement.

As a country repeatedly emphasized by the Trump administration as "at the forefront of negotiations," the Japanese delegation led by Economic Revitalization Minister Ryosei Akazawa will visit the US on Thursday and hold talks with US Treasury Secretary Besant.

At this critical juncture, Japanese Prime Minister Shigeru Ishiba emphasized in parliament on Monday, Japan does not intend to make significant concessions in the upcoming negotiations with the Trump administration, nor will it rush to reach an agreement.

Ishiba stated: "I do not believe that significant concessions should be made to expedite the conclusion of negotiations. When negotiating with the US, Japan needs to understand the logic behind Trump's statements and the emotional factors in his views."

Bank of Japan Governor Kazuo Ueda also warned on Monday, stating that "US tariffs could exert downward pressure on the global and Japanese economies through various channels."

In addition to the trade deficit between the US and Japan, Trump frequently criticizes the weak yen exchange rate, which could also become a core issue in this week's negotiations.

To this end, the Japanese have also kept a card up their sleeve.

What will be discussed this week?

As the leader of the Japanese negotiation team, Ryosei Akazawa stated at a press conference last Friday that it is currently unclear what demands the US will make, and clarifying these demands will be the starting point of the negotiations.

Projects frequently mentioned by US and Japanese officials recently include a liquefied natural gas project in Alaska. Besant has stated that Japan and South Korea could provide substantial orders for this project and also offer financing for its development.

Of course, the reason this project requires the US to push through tariffs is due to a series of issues such as high construction difficulty, long development cycles, and uncertain profitability.

On the highly concerning issue of exchange rates, the Japanese delegation has specifically "kept a card up their sleeve": Separate heads for trade negotiations and exchange rate negotiations. The exchange rate issue will still be handled by Finance Minister Katsunobu Kato, who plans to head to Washington in late April to attend the International Monetary Fund and World Bank meetings, where a meeting between the two finance ministers may be arranged, providing an opportunity to discuss exchange rate issues.

Akazawa also stated last week that if Besant raises the exchange rate issue during the talks, he is willing to discuss it.

To delay the negotiations until Kato's visit to the US, the Japanese Ministry of Finance will send its highest-ranking foreign exchange official, Atsushi Mimura, to accompany Akazawa on his visit to the US.

In addition to exchange rates, recent fluctuations in the US Treasury market have also brought Japan, the largest "creditor" of the US, into focus, and the situation of Japanese institutions selling US Treasury bonds could become another focal point of the negotiations.

Japan is also concerned that, as one of the first countries to negotiate with the Trump administration, the US may attempt to impose harsh conditions on its ally Japan to pressure other countries. As background, the US did not notify Japan in advance before announcing the "reciprocal tariff" rates.

For Japan, the Trump administration may also express dissatisfaction with the US-Japan Security Treaty. Similar to the situation with NATO, Trump often complains that such treaties allow allies to "free ride" on the US. Previous reports have suggested that the Trump administration may demand Japan increase its defense spending as a percentage of GDP, potentially increasing the Japanese government's financing pressure, and Japan may propose expanding US arms purchases in response.