US and Japan Clash Over Profit Sharing in $550B Trade Deal: Who Gets the Lion’s Share?

• Why Are the US and Japan at Odds Over the Trade Deal?
• What’s Inside the $550B Package?
• Automakers Cry Foul Over Tariff Loopholes
• Labor Unions Slam "Race to the Bottom" Standards
• Trump’s Global Trade Chessboard
• Can This Deal Survive the Backlash?
• FAQ: US-Japan Trade Deal Dispute

The US and Japan are locked in a heated dispute over how to split profits from their newly signed $550 billion trade and investment package. While both nations agreed on the broader economic framework, tensions Flare over whether Washington deserves 90% of the gains—a claim Tokyo calls "unacceptable." Automotive giants and labor unions are also up in arms, warning of unfair competition and diluted standards. Here’s the full breakdown of the deal’s sticking points, industry backlash, and what it means for global trade.

Why Are the US and Japan at Odds Over the Trade Deal?

The Core conflict revolves around profit distribution. The US insists it should retain 90% of the gains, citing its "larger economic role" and investment structure. Meanwhile, Japan demands proportional sharing based on each nation’s contributions and risk exposure. A Japanese government official told Reuters the split must reflect "respective levels of contribution and risk," directly contradicting Washington’s stance.

What’s Inside the $550B Package?

The deal, announced by President TRUMP last Tuesday, includes a 15% tariff on imported goods and a $550 billion investment commitment from Japan. Key components involve loans and guarantees from Japan Bank for International Cooperation (JBIC) and Nippon Export and Investment Insurance (NEXI). However, critics argue the terms disproportionately favor US interests, especially in automotive trade.

Automakers Cry Foul Over Tariff Loopholes

US car manufacturers are livid. Matt Blunt of the American Automotive Policy Council (representing GM, Ford, and Stellantis) warned the deal creates "uneven competition" by lowering tariffs on Japanese cars with no US-made content. "This is a hard nut to crack," Blunt said, doubting US automakers WOULD gain significant market share in Japan. Currently, US firms face 50% tariffs on imported steel/aluminum and 25% duties on vehicle parts—protections absent in the new deal.

Labor Unions Slam "Race to the Bottom" Standards

The United Auto Workers (UAW) union blasted the agreement for failing to match labor standards negotiated in other deals like the USMCA. "If this becomes the blueprint for Europe or South Korea, it’s a major missed opportunity," UAW stated. They accused the deal of rewarding cost-cutting over fair wages, adding, "We need trade pacts that raise standards, not undercut them."

Trump’s Global Trade Chessboard

This dispute coincides with other US trade moves. Earlier this week, the administration finalized deals with the Philippines (19% tariff on US imports) and Indonesia (similar 19% rate). Trump also hinted at future EU tariffs ranging from 15% to 50%, calling it a "simple and fair" approach during an AI summit in Washington.

Can This Deal Survive the Backlash?

Japan’s chief trade negotiator, Ryosei Akazawa, downplayed the 90-10 proposal as "not final," but tensions persist. With automakers, unions, and policymakers on both sides digging in, renegotiations seem likely. As one industry insider quipped, "This isn’t just about splitting profits—it’s about saving face."

FAQ: US-Japan Trade Deal Dispute

What’s the main disagreement in the US-Japan trade deal?

The US wants 90% of profits, while Japan insists on proportional sharing based on contributions and risk.

How are US automakers affected?

They face higher tariffs (50% on steel/aluminum, 25% on parts) without reciprocal benefits for exports to Japan.

What’s the UAW’s criticism?

The union argues the deal lowers labor standards compared to agreements like USMCA.