World News

Now Even Japan Is Pushing Back Against Trump’s Tariffs

Posted May 18, 2018 1:43 p.m. EDT

TOKYO — After months of taking hits from the United States over North Korea policy and trade, Japan has decided that it will only be pushed so far, and is threatening to punch back.

On Friday, Japan notified the World Trade Organization that it was reserving the right to impose retaliatory tariffs against the United States in response to tariffs on steel and aluminum imports proposed by President Donald Trump.

Japan has not yet filed a formal complaint with the WTO, but is signaling that it could impose the retaliatory measures if it does not gain tariff exemptions that it has been seeking from Washington.

For Japan, where Prime Minister Shinzo Abe has worked hard to cultivate a close relationship with Trump on the golf course and over the telephone, the preliminary notice to the WTO was symbolically significant.

Until now, Japan has sidestepped any confrontation with the United States, even after it was the largest American ally to be left off a list of countries granted temporary exemptions from the steel and aluminum tariffs in March.

“This is Japan basically readying itself for a trade war,” said Jeffrey Wilson, a research fellow at the Perth USAsia Center at the University of Western Australia. “This is saying, ‘OK, Japan can say no to the United States.'”

Japan’s Ministry of Economy, Trade and Industry said it would decide whether to impose counter tariffs on U.S. goods “after carefully examining the U.S. relevant measures and their impacts on Japanese industries.”

It said that the U.S. tariffs would result in duties of 50 billion yen on Japanese exports to the United States. It did not specify what American products it would target for retaliatory tariffs.

Japan’s move comes as China and the United States have been trying to cool economic tensions between the two countries and avert a looming trade war.

It appears Japan may be going the other way. After weeks of trying to persuade Washington to grant an exemption from the steel and aluminum tariffs, Tokyo may also be trying to send a more strident message that it does not want to engage in bilateral trade talks.

The steel and aluminum tariffs are unlikely to put that much of a dent in Japan’s economy. The country’s steel exports to the United States represent just 5 percent of its total steel exports, and it produces very little aluminum. Officials have said that they expect U.S. manufacturers to continue to demand the highly specialized steel parts that Japan produces.

But Japan is adamantly opposed to a bilateral deal, and the threat of retaliatory measures against U.S. imports to Japan could give Japan leverage when resisting the Trump administration’s pressure for a two-way trade deal.

Trump has repeatedly called for direct trade talks with Japan. “What I really prefer is negotiating a one-on-one deal with Japan,” Trump said during remarks to reporters after a summit meeting at his Mar-a-Lago club in Florida with Abe last month.

Abe has demurred firmly but politely, indicating that Japan would like to stick to the broad trade pact among 11 countries known as the Trans-Pacific Partnership, a deal from which Trump withdrew the United States his first week in office. Japan’s lower house ratified the deal Friday.

Japan led the effort to salvage the agreement among the 11 remaining countries after the American retreat, but has always maintained that the United States would be welcome to return on the original terms agreed to by the Obama administration.

Trump briefly flirted with rejoining the trade agreement but then quickly rebuffed the idea while Abe was in Mar-a-Lago last month.

Analysts in Japan said that over the 16 months that Trump has been in office, Abe’s government has learned how to deal with the mercurial president.

“The Japanese government is starting to feel that the appeasement tactics aren’t really working,” said Takuji Okubo, managing director and chief economist at Japan Macro Advisors. “Actually taking countermeasures may work better.”

Okubo added that Abe was most likely “quite disappointed by the relatively cool, or even cold, treatment by President Trump” in recent weeks. For Trump’s first year in office, Abe’s close personal relationship helped stave off the U.S. president’s long-percolating economic ire toward Japan.

During his presidential campaign, Trump, invoking three-decades-old perceptions of Japan, criticized the country for “crushing” the United States in trade. After he took office, he threatened to impose a “big border tax” on Toyota if it built a new auto plant in Mexico.

After he was elected, his bark seemed worse than his bite. But with the steel and aluminum tariffs, and increasing pressure to open bilateral trade talks, Japan has started to resist.

Senior Japanese officials have insisted that the government is not interested in a two-way trade deal. Last month, Toshimitsu Motegi, Japan’s minister of economic and fiscal policy, told reporters that “we don’t have a bilateral free-trade agreement in our mind” and said plans for talks between Motegi and Robert Lighthizer, the U.S. trade representative, were not intended as a step toward any bilateral agreement.

The Trump administration, by contrast, has broadcast the president’s desire for a one-on-one pact with Japan.

At a conference this week in Tokyo sponsored by The Wall Street Journal, Susan Thornton, the acting assistant secretary of state for Asia, said, “We’re going to have that bilateral trade deal, or we’re going to have a trade deal.”

Japan could also file a formal complaint with the WTO, which could take years to reach a decision on whether the U.S. tariffs violate international trade law. In 2003, after a complaint filed by the European Union and several other countries, including Japan, the WTO ruled that steel tariffs imposed by President George W. Bush were illegal.

Analysts said that Japan may have at first chosen to avoid provoking Trump. But “they have seen how this playbook goes, and they can be a little more confident in bluff calling,” Wilson of the Perth USAsia Center said.