US-Japan Trade Talks Collapse, Trump and Ishiba Shigeru Fail to Reach Agreement

Japanese Prime Minister Kishida Fumio failed to reach a trade agreement with US President Trump during the Group of Seven (G7) summit, a result that has brought Japan's economy closer to the brink of recession amid the impact of US tariffs.

"We will continue to actively coordinate with the US to reach an agreement that benefits both sides without sacrificing Japan's national interests," Kishida told the media on Monday on the sidelines of the G7 meeting in Calgary, Canada. "Currently, there are still differences between the two sides on some issues."

Trump, for his part, told the media that he had a "very good conversation" with Kishida and said an agreement was still possible.

"The Japanese are tough," Trump said. Regarding the potential consequences of failing to reach an agreement, he said, "At the end of the day, you have to understand that we'll send a letter telling them this is the price you have to pay, or else don't do business with us."

Like other countries, Japan faces 25% tariffs on automobiles and parts, as well as 50% tariffs on steel and aluminum products. In addition, the Trump administration has imposed a reciprocal tariff rate of 24% on Japan (currently temporarily reduced to 10%).

According to a report released by Daiwa Institute of Research in May this year, if the so-called "reciprocal tariff" rises from the current 10% to 24%, Japan's real GDP will be reduced by approximately 2.2% by 2029.

Automobile tariffs are a key focus of negotiations between Japan and the US. The automotive industry is crucial to Japan's economy. According to data from the Japan Automobile Manufacturers Association (JAMA), the industry employs approximately 5.6 million people, accounting for 8.3% of the country's total workforce, and contributes about 10% of GDP.

Major Japanese automakers such as Toyota, Honda, Mazda, and Subaru expect to face collective losses exceeding $19 billion in the current fiscal year alone due to the impact of tariffs.

"For Japan, automobiles are indeed a matter of national interest. We will protect them at all costs," Kishida said in a media interview.

When asked whether automobile tariffs were included in the negotiation agenda, Trump did not reveal much, only saying, "We'll see."

According to previous media reports, Japan has proposed a series of potential concessions in an attempt to narrow its trade surplus with the US, including increasing imports of soybeans from the US and strengthening cooperation in the shipbuilding sector.

In addition, Japan has also tried to persuade the US by emphasizing its status as the largest investor in the US, arguing that if tariffs weaken Japan's domestic economy, it will affect its ability to invest in the US.

However, so far, these commitments still seem not enough to facilitate a trade agreement between the US and Japan.