Preparing to "Stand Firm" Against Trump's Tariff Threats? Japan's Economic Advisor: There Are Many Cards to Play in Negotiations!

Takeshi Niinami, senior economic advisor to the Japanese Prime Minister and CEO of beverage manufacturer Suntory, recently stated that Japan has "many cards" to play in tariff negotiations with the US.

As he made these remarks, Ryosei Akazawa, Japan's Minister of Economic Revitalization, began talks in Washington on Wednesday with US Treasury Secretary Besant and Trade Representative Jamieson Greer. The talks are expected to be preliminary and may not result in an immediate agreement.

Niinami expressed a "cautiously optimistic" attitude towards the trade negotiations during a program. He pointed out that Japan has been the largest foreign investor in the US and the largest foreign holder of US Treasury bonds. Therefore, Japan should discuss more investment opportunities in the US and maintain its substantial inventory of US Treasury bonds. Niinami said, "We know the US President is very concerned about the bond market."

It is reported that Japan holds about $1.1 trillion in US Treasury bonds. Trump previously stated that the sell-off in the bond market was part of the reason he changed his "reciprocal" tariff policy. On the 10th of this month, Kevin Hassett, Director of the White House National Economic Council, also stated that the decline in the bond market was one of the reasons for Trump's decision.

Typically, when the situation is chaotic and uncertainty is high, investors buy safe assets like US Treasury bonds, which often lowers the yield of US Treasury bonds. However, the yield of US Treasury bonds is currently rising. Former US Treasury Secretary Yellen recently warned that the recent drop in US bond prices and the significant rise in yields are unusual phenomena, raising concerns about a possible "crash" in the US bond market.

According to Niinami, another measure the Japanese government may take is to discuss purchasing military equipment from the US.

Currently, Japan is striving to increase its defense spending to 2% of its GDP. It is understood that Japan and the US have a deep military relationship, with the Japanese Self-Defense Forces using a large amount of US equipment, including fighter jets, helicopters, and some small arms. "Let us normalize our relationship because we are the US's largest ally. Therefore, we hope to normalize the relationship between the two countries and enhance US-Japan relations in regional security,"

Niinami said.

He also admitted that although investing in the US is not ideal under the current circumstances, the US's productivity is much higher than that of other countries, making the market attractive.

"I think we do not like the current US plan, but we hope to continue investing in the US," he concluded.

Facing Trump's "strong tariffs," Japanese Prime Minister Shigeru Ishiba emphasized on Monday that Japan does not intend to make significant concessions in the trade negotiations with the US later this week, nor is it in a hurry to reach an agreement.

"I do not think we should make significant concessions just to quickly conclude the negotiations," he said.