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Japan appeared on Tuesday as the first major economy to secure priority tariff negotiations with Donald Trump, highlighting Washington’s biggest creditor and investor position, causing a 7% surge in Tokyo-listed stocks.
Equity Market almost completely overturned a major collapse in Japanese stocks on Monday, with leaders agreeing to hold negotiations following a 25-minute conversation between the US president and the Japanese prime minister with Isba Island Prime Minister.
After the call, Trump posted on his true social platform that Japan treated the United States “very poorly” in trade. “They don’t take our cars, but we take millions of theirs. Agriculture, as well as many other “things.” It all needs to be changed, especially in China!!!”
Isba has appointed his economic revitalization minister, Lyosei Akazawa, as the leading negotiator for Japan’s consultations. This reflects the country’s need to protect the automotive industry, which Tokyo officials expect to begin “soon,” and where a significant portion of the economy is built.
The US side will be led by Treasury Secretary Scott Bescent along with US trade representative Jamieson Greer. “We would expect Japan to become prioritized as Japan moves forward very quickly,” Bescent said on Fox News on Monday.
Akazawa told reporters Tuesday that Bescent’s role as head of the US delegation suggested that the White House “has a strong interest in the area he overseen.”
These statements sparked hopes among investors that, in addition to tariffs, negotiations would also focus on the dollar-Yen exchange rate, which emerged as a source of competition for the Trump administration.
“The Bank of Japan is fiercely independent, but as Japan is looking for ways to ease these sudden tariffs, pressure is being put on by the central government to accelerate interest rate hikes and increase the yen.”
Japan, which considers Washington’s closest Asian ally itself, was surprised last week when Trump announced a 24% tariff on imports, in addition to a 25% collection on vehicles. Isba calls the measure Japan’s “national crisis.”
Analysts warned that tariff burdens are disastrous for Japan. This is dependent on relatively low friction trade, despite long-term investments in US-based manufacturing, which has made significant profits from exports.
Isba reminded Trump on Monday of his position as the largest foreign investor in the United States, warning that the flow of corporate investment is at risk of threatened taxation.
Yamaguchi Take, Japanese economist at Morgan Stanley Mafugu Securities, said tensions in the US could potentially serve as a tailwind for US negotiations.
“Japan needs to propose a package to reduce the deficit given the US administration view it as a problem,” Yamaguchi said. He proposed possibilities such as commitment to adjust with the US in the event of excessive yen depreciation, such as increased imports of US agricultural products, defense equipment and energy.
With a further signal of US openness, Trump ordered a new national security review on Monday for a $15 billion acquisition proposal for Pennsylvania-based US steel. The Treasury-led review will provide recommendations for Trump within 45 days.
Joe Biden blocked the acquisition in January with one of his final acts. Trump also showed he was against a full takeover.
However, two people familiar with the issue say that the Japan steel executives are negotiating with U.S. Secretaries of Commerce Howard Lutnick and Howard Lutnick.
Shares in the stock on Sunday rose 10.5% on Tuesday morning, then rose 6.3% in the afternoon, cutting profits.
In a statement, the company said, “We look forward to timely resolutions, so we will be able to launch planned investments that position US steel as a major global steel producer.”
