ADVERTISEMENT

U.S., Japan Agree to Talks on Steel and Aluminum Tariffs

U.S., Japan Agree to Talks on Steel and Aluminum Tariffs

Washington and Tokyo agreed to start talks on resolving disputes over tariffs imposed on Japanese steel and aluminum under former President Donald Trump in 2018.

The Japanese Ministry of Economy, Trade and Industry announced the discussions Monday following a meeting between U.S. Commerce Secretary Gina Raimondo and her Japanese counterpart, Koichi Hagiuda. The move comes weeks after the U.S. agreed to remove similar tariffs on certain quantities of steel and aluminum from the European Union. 

The two sides also agreed to establish the Japan-U.S. Commercial and Industrial Partnership, aimed at maintaining a free and fair economic order, according to the statement. The partnership will aim to improve industrial competitiveness in the U.S. and Japan, shore up supply chains and tackle climate change.

Raimondo and U.S. Trade Representative Katherine Tai said in a statement last week that they planned to discuss with Japan excess supply of the metals driven largely by China, as well as Washington’s metals duties. 

Japan was subjected to the 25% tariffs on steel and 10% tariffs on aluminum using the section 232 national-security provision in a 1962 trade law, in the opening salvo of Trump’s trade wars with his country’s traditional allies. Despite the bilateral security alliance and then-Prime Minister Shinzo Abe’s efforts to build a personal relationship with Trump, Japan wasn’t among the nations that were able to negotiate deals to avoid the levies. 

While the EU responded with retaliatory tariffs on the U.S., Japan took a softer approach. Asia’s second-largest economy had been expected to suffer relatively little damage because only 5% of its steel exports went to the U.S. at the time, although more is thought to reach the market via Mexico.

Japan’s exports of steel that falls under the scope of the tariffs fell from $1.7 billion in 2017 to $1 billion in 2020, according to METI. Aluminum exports subjected to the quotas fell to $130 million from $250 million over the same period. 

Hagiuda pressed for a resolution of the issue in calls with both Raimondo and Tai earlier this month, and public broadcaster NHK cited him as saying the tariffs were damaging. 

Raimondo said last week that it was too early to say how close the U.S. was to resolving the issue with Japan and whether it could be settled via a tariff-rate quota, as with the EU. That mechanism allows countries to export specified quantities of a product to other nations at lower duty rates, but subjects shipments above a pre-determined threshold to higher tariffs.

©2021 Bloomberg L.P.