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Donald Trump has threatened to increase levies on Japan and cast doubt that the US would reach a deal with its Asian ally, as he escalated his trade rhetoric days before his pause on some steep tariffs is set to expire.
The US president said he would impose new levies on countries that failed to agree a trade deal by July 9, when the “reciprocal” tariffs unleashed in April are set to resume.
He also singled out Tokyo, a crucial trading partner that had been among the first countries to seek a deal with Trump after he shocked global markets in April by launching a global trade war on “liberation day”.
“We’ve dealt with Japan. I’m not sure we’re going to make a deal. I doubt it,” Trump said.
“I’ll write them a letter to say ‘we thank you very much, and we know you can’t do the kind of things that we need, and therefore you pay a 30 per cent, 35 per cent’ or whatever the number is that we determined,” he said. “Because we also have a very big trade deficit.”
The comments from the president suggested Trump remained willing to take a hard line on negotiations with trading partners, despite backing down on his higher global tariffs earlier this year in the face of deep market turmoil.
The US imposed a tariff of 24 per cent on all imports from Japan on Trump’s so-called liberation day on April 2, before temporarily lowering it to 10 per cent for 90 days to allow talks to take place.
The threat to increase tariffs on the world’s fourth-largest economy will heighten fears that Trump will reignite a global trade war if his officials fail to line up countries before his own deadline next week.
Trump also told reporters on Air Force One on Tuesday that he was not considering extending next week’s deadline for any countries to allow talks to continue.
The US president announced a 90-day pause to his reciprocal tariffs in April after his trade war triggered a bout of severe market turmoil and a steep sell-off of US bonds.
Trump claimed at the time that he would sign 90 deals during the hiatus, although only the UK has struck a new trade agreement with the US.
Trump has accused Japan of being “spoiled” and refusing to commit to buying more American rice or to allow US-manufactured cars into its market.
Japan already faces a 10 per cent tariff on most of its exports to the US, but Japanese cars and car parts are also subject to a 25 per cent border tax tariff. Steel and aluminium face a 50 per cent levy.
US and Japanese trade officials have been locked in intense negotiations since earlier this year. Japan is slowly accepting that it will not be exempt from automotive tariffs, according to one person familiar with the talks, but it wants a guarantee that any deal struck will be final.
“Japan is digging its heels in with an insistence that the US agrees that, whatever the deal is, this really is it, and there will not be any further tariff hikes. Japanese companies need to know exactly what the tariff will be and start planning for that, and so Tokyo is negotiating for a deal that represents a covenant the US will stick to,” said the person.
Japanese markets fell on Wednesday, with the exporter-oriented Nikkei 225 index declining 1.2 per cent and the benchmark Topix losing 0.3 per cent. The yen edged down 0.1 per cent against the dollar to trade around ¥143.6.
US stocks ended Tuesday lower, with the S&P 500 down 0.1 per cent. The two-year Treasury yield, which moves inversely to prices, rose 0.05 percentage points to 3.78 per cent.
Additional reporting by George Steer in New York and William Sandlund in Hong Kong