Japan Seeks Trade Deal with the U.S.

Japan Seeks Trade Deal with the U.S.

Japan’s chief trade negotiator, Ryosei Akazawa, is visiting Washington (April 16–18, 2025) to seek reductions on U.S. tariffs that are constraining Japan’s export-heavy economy. Japan currently faces a 10% universal tariff and a 25% tariff on automobiles, steel, and aluminum—sectors central to its industrial base. Though a 24% across-the-board tariff has been paused for 90 days, Prime Minister Shigeru Ishiba has declared the trade environment a “national crisis.” Rather than retaliate, Japan is leaning on diplomacy, coordination with allies like the UK and Singapore, and strategic investments in the U.S.—notably a multi-billion-dollar natural gas project in Alaska.


A key backdrop to the tensions is Japan’s longstanding trade surplus with the U.S., which totaled approximately $67 billion in 2024. This surplus, largely driven by auto and machinery exports, is a political flashpoint in Washington, where protectionist sentiment remains strong.


Akazawa’s mission is to secure a phased easing of tariffs without triggering broader trade reprisals or sacrificing key sectors. The talks may also touch on currency transparency and U.S. market access. The stakes are high—not just economically but symbolically—for how allies resolve disputes in an era of shifting global trade norms.

Political Effects

Financial Effects

Economic Effects

Scenario Tree: Japan-U.S. Trade Deal

Adjust your own probability estimates for each scenario below. Lock one to keep it fixed and compare against Downstream's model.

Base Case

Trade deal is signed with modest tariff reductions.

  • Boost in Japanese auto exports
  • Limited U.S. farmer access to Japan
  • Muted market response
Downstream's Confidence: 50%
Your Estimate: 33%

Upside Case

Comprehensive trade agreement with strategic alignment.

  • Major boost to Japanese industrial output
  • Positive U.S. market sentiment
  • Geopolitical pressure on China
Downstream's Confidence: 30%
Your Estimate: 33%

Downside Case

Talks collapse over agricultural terms.

  • Trade friction escalates
  • Risk-off market response
  • China gains regional leverage
Downstream's Confidence: 20%
Your Estimate: 34%
Japan
U.S.
China
Automotive Exports
Agricultural Exports

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© Downstream Intelligence