Japan Questions U.S. Tariffs, Citing Lack of Clear Meaning

Japan is closely monitoring the situation as the U.S. government imposes new tariff rates on major trading partners, including a 12.5% tariff on Japanese exports, replacing the existing 10% rate. Chief Cabinet Secretary Minoru Kiihara stated, "We regret the imposition of tariffs for reasons such as the absence of a ban on imports of products produced by forced labor." However, he noted that the U.S. confirmed it would not take additional measures beyond what was agreed upon last year.

The U.S. Trade Representative (USTR) announced that starting June 24, new tariffs ranging from 10% to 12.5% would be applied to 60 trading partners under Section 301 of the Trade Act of 1974. This section allows the U.S. to respond with tariffs against countries that harm the U.S. through unfair trade practices. Seventeen economies, including Argentina, Canada, India, Mexico, and the UK, received a 10% tariff after establishing or promising to implement import bans on goods produced by forced labor. Other countries, such as South Korea, Japan, and China, were subject to a 12.5% tariff.

Japan had previously agreed with the U.S. to a maximum tariff rate of 15% in exchange for a $550 billion investment in the U.S. The 12.5% rate is seen as adhering to this agreement. However, the new rate is 2.5 percentage points higher than the 10% "global tariff" applied after a U.S. Supreme Court ruling in February invalidated certain tariffs imposed by the Trump administration. This increase is projected to lower Japan's real GDP by 0.06% over the next year.

There is also dissatisfaction in Japan regarding the U.S. justification for the tariffs, citing a lack of robust import bans on products made with forced labor. A report by Nomura Research Institute noted that while Japan's regulations on forced labor products are considered weaker compared to major countries, it has made efforts, such as establishing human rights guidelines in supply chains in 2022.

Japanese media outlets are warning that Trump-style tariffs could backfire on the U.S. They argue that manufacturers may pass on the increased costs to consumers, ultimately harming the American public. Reports indicate that various U.S. industry groups have requested exemptions for imported raw materials. A study by the Kiel Institute for the World Economy suggested that only 4% of the burden of U.S. tariffs is borne by foreign exporters, with the remaining 96% passed on to U.S. buyers. The Asahi Shimbun commented that the side effects of high tariffs being passed on to U.S. importers and consumers are becoming apparent, making it increasingly difficult to understand the meaning of the Trump administration's tariff policies.

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We regret the imposition of tariffs for reasons such as the absence of a ban on imports of products produced by forced labor. However, we confirmed that additional measures beyond what was agreed upon last year will not be taken.