Japan Stresses Fairness in Trade Talks Amid U.S. Pressure on Auto Rules

Shigeru Ishiba, the Japanese Prime Minister, stressed the need for “fairness” in the trade discussions with the U.S. at an ongoing meeting of G-7 ministers and global leaders in Paris. The discussions will handle existing issues on tariffs, currency and markets overall, amid President Donald Trump’s push for global trade reforms, and U.S. pressure on Japan to address auto regulations and currency.

Trump has accused Japan of purposely weakening the yen to increase the country’s exports, which Japan denies. Finance Minister Katsunobu Kato is scheduled to discuss currency policy with U.S. Treasury Secretary Scott Bessent during the G20 and the IMF meetings this week. Japan has mentioned non-tariff barriers to trade and had an indication of a willingness to relax some auto safety standards which the U.S., in essence, labels as non-tariff trade barriers. Ishiba recognized that there are differences between U.S. and Japan in traffic regulations, but maintained that Japan’s regulations on vehicle specifications were "not unfair." Reports out of Japan suggest that in order to appease the Detroit automakers, Tokyo may be willing to reduce some vehicle import rules and restrictions, but experts have noted that U.S. vehicles are often not suitable for Japan’s road specifications in any case.

In order to alleviate tensions, Ishiba alluded to increasing purchases of U.S. liquefied natural gas (LNG), which is currently number four on Japan's supplier list. "The U.S. could go higher if it can guarantee stable deliveries," he said. Yet, Japan ruled out using its $1 trillion in U.S. Treasury holdings as a bargaining chip, saying such moves would be a "threat to global economic stability."

Trump applied a 24% tariff on Japanese exports and has a 25% tariff on a central area of trade for Japan: cars. While Tokyo is looking for compromises, Ishiba reiterated the importance of protecting Japan's export-led economy against sudden currency volatility. The strength of the yen remains fragile. The last time Japan intervened to lobby against the volatility of the exchange rate was in 2023.