TOKYO — On Monday (April 14), Japanese Prime Minister Shigeru Ishiba stated that Japan has no intention of making major concessions or rushing into a trade agreement during the upcoming tariff negotiations with the United States under President Donald Trump’s administration. Despite being a long-standing ally of the US, Japan has been hit with a 24% tariff on its exports to America. Although these duties have been paused for 90 days, a universal 10% tariff remains in place, along with a 25% tariff on automobiles — a sector that makes up around 28% of Japan’s exports to the US. Talks between the two countries are set to begin on Thursday in Washington, focusing on tariffs, non-tariff issues, and currency exchange rates.

“I don’t believe we should make major compromises just to conclude talks quickly,” Ishiba said in parliament, adding that Japan would not impose retaliatory tariffs on US goods. He emphasized the importance of understanding both the reasoning and emotional motivations behind Trump’s position, warning that such tariffs could destabilize the global economy.

Bank of Japan Governor Kazuo Ueda echoed concerns, noting that US tariffs could negatively impact both the Japanese and global economies through multiple channels. Aside from the trade imbalance, Trump has accused Japan of keeping its currency weak on purpose — potentially increasing pressure on Tokyo to strengthen the yen. Recently, the yen has gained due to a broader sell-off of the dollar.

Japan’s slow pace in raising interest rates might also come under scrutiny, sources say. Economy Minister Ryosei Akazawa, who will head Japan’s trade team, stated that any currency-related discussions will take place between Finance Minister Katsunobu Kato and US Treasury Secretary Scott Bessent. Kato noted that both nations agree that excessive currency market swings are harmful to the economy.

Currency talks may also influence monetary policy decisions, possibly affecting when and by how much the BOJ adjusts interest rates. Akira Otani, a former BOJ economist now at Goldman Sachs Japan, said the central bank might halt rate hikes if the yen approaches 130 per dollar, while a drop below 160 could accelerate future hikes. On Monday, the dollar declined 0.62% to 142.62 yen (S$1.30). Historically, Japan has aimed to prevent the yen from strengthening too much, as it hurts exports. However, a weaker yen has recently become a greater concern, driving up import costs and reducing consumer spending.

Both ruling and opposition lawmakers are now calling for tax cuts or direct payments to help ease the burden of higher living costs and US tariffs. While Ishiba said there are no immediate plans for a supplementary budget, he affirmed that the government is prepared to respond promptly if needed.

Disclaimer: This image is taken from Reuters.