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Misreading Trump: Ally Japan is spurned on tariff exemptions

TOKYO — For Japan, the hits just keep on coming.

On Friday (March 23), officials in Japan awoke to the news that it was the largest US ally to be left off a list of countries temporarily exempted from stiff tariffs on steel and aluminum imports by the Trump administration. Photo: The New York Times

On Friday (March 23), officials in Japan awoke to the news that it was the largest US ally to be left off a list of countries temporarily exempted from stiff tariffs on steel and aluminum imports by the Trump administration. Photo: The New York Times

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TOKYO — For Japan, the hits just keep on coming.

Only last week, Tokyo was scrambling to recover after being caught flat-footed by United States (US) President Donald Trump’s abrupt acceptance of an invitation to meet Mr Kim Jong Un personally to discuss North Korea’s nuclear program.

On Friday (March 23), officials in Japan awoke to the news that it was the largest US ally to be left off a list of countries temporarily exempted from stiff tariffs on steel and aluminum imports by the Trump administration.

The omission of Japan, the largest foreign supplier to be so excluded, was especially pointed. Australia, Brazil, Mexico and even South Korea, which is engaged with the United States in tense renegotiations of a free-trade pact, appeared on the list.

The move also seemed a personal snub of Prime Minister Shinzo Abe, who has courted Mr Trump through rounds of golf, frequent telephone calls and lavish steak meals.

“It’s really kind of almost tragicomic,” said Dr Koichi Nakano, a political scientist at Sophia University in Tokyo and frequent critic of the Japanese leader. “Abe was being really sycophantic in trying to please Trump, and at a certain point, quite recently, he was talked about as the closest friend that Trump has. And it all turns out that that wasn’t good for anything when it comes to furthering the national interests of Japan.”

To be sure, Mr Abe is not the first US ally to be so spurned. Ms Theresa May of Britain, Mr Justin Trudeau of Canada and Ms Angela Merkel of Germany have all had turns at being Mr Trump’s slighted friend.

Japan could yet win an exemption from the new tariffs. Mr Trump’s announcement offered a path for countries left off the initial list to “discuss with the United States alternative ways to address the threatened impairment of the national security caused by imports of steel articles.” This week, Japan’s trade minister, Mr Hiroshige Seko, told reporters there was a “high chance” that some of its steel and aluminum products would be exempted.

But for anyone who has been paying attention, there have been hints all along that in matters of trade, Tokyo should regard Mr Trump as much “frenemy” as friend.

During the presidential campaign, he seemed to harbour three-decades-old perceptions of Japan, chastising it for “crushing” the United States in trade, invoking the specter of the 1980s and the height of the trade wars between the two countries. After he was elected, he threatened to impose a “big border tax” on Toyota if it built a new auto plant in Mexico.

In niggling comments during a visit to Tokyo last fall, Mr Trump told Japanese executives to “try building your cars in the United States instead of shipping them over,” ignoring the fact that Japanese carmakers build nearly 4 million vehicles in plants in the United States annually, more than twice the number the industry ships from Japan.

On Friday, Mr Seko, the trade minister, said it was “extremely regrettable” Japan had not immediately been exempted from the steel and aluminum tariffs.

Still, analysts said Japanese officials probably realised it was only a matter of time before Mr Trump took action on trade.

Analysts said Mr Trump had left Japan off the exemption list as a negotiating tactic to try to force it into bilateral free-trade talks.

“He wants something like some concessions from Japan regarding the auto market or maybe agriculture,” said Prof Shujiro Urata, dean and professor in the Graduate School of Asia-Pacific Studies at Waseda University in Tokyo. “So in order to get these concessions, this could be a very effective strategy.”

When announcing US$60 billion in tariffs against China Thursday, Mr Trump directed a sugarcoated barb against Japan and Abe.

“I’ll talk to Prime Minister Abe of Japan and others - great guy, friend of mine - and there will be a little smile on their face,” Mr Trump said. “And the smile is, “I can’t believe we’ve been able to take advantage of the United States for so long.’ So those days are over.”

Analysts said Mr Trump was clearly playing to his domestic audience.

“He has to promote this to his supporters in the United States,” said Prof Kazuhiro Maeshima, professor of politics at Sophia University. “In the history between Japan and the United States over the past 30 years, Japan has been seen as an archenemy in the trade wars, so the voters’ image of Japan is bad. The reality is that China dominates the trade deficit, but the reality and image are different.”

In any case, the tariffs are unlikely to hurt Japan’s economy that much. The country’s steel exports to the United States represent just 5 per cent of its total steel exports, and it produces very little aluminum.

“The real serious problem for the world is China’s excessive production,” said Prof Masahiko Hosokawa, a professor at Chubu University and a former director of the US division of Japan’s Trade Ministry.

“Unless the problem of China’s excessive steel production is resolved, the products will only flood into Asian markets if the US stops importing them,” Prof Hosokawa said. “The products that are supposed to go to the US will flood the Asian market and steel prices will continue to decline.”

Mr Trump’s actions feed concern in Asia about Chinese dominance. Because he is “unpredictable and kind of capricious,” Prof Urata said, more countries will perceive the United States as “a very difficult country to work with that we cannot trust and rely on,” leaving a void that China will increasingly fill.

In the immediate term, Japan’s hand is weakened by the fact that Mr Abe is embroiled in a scandal involving allegations that he influenced a sweetheart land deal for a crony.

That will make it more difficult for Mr Abe to negotiate with Mr Trump from a position of strength, or to persuade Japanese businesses to consider any trade concessions. “Mr Abe’s power to persuade businesses and to talk with the US is much weaker than it was even two months ago,” Prof Maeshima said.

Then again, Mr Trump could reverse course at any moment.

Under the tariff laws, the United States “could exempt Japan tomorrow, or they could decide ‘no, no, no, Europe and Canada, we’re actually going to apply this law to you,’” said Prof Chad Bown, a senior fellow at the Peterson Institute for International Economics in Washington. “It gives tremendous discretion to the president to do whatever he wants.” THE NEW YORK TIMES

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