US and Japan Clash Over Profit Sharing in $550 Billion Trade Deal: Who Gets What?

• What’s the Core Dispute in the US-Japan Trade Deal?
• Why Is Japan Pushing Back Against the 90-10 Split?
• How Are US Automakers Reacting to the Deal?
• What’s the Labor Union’s Stance?
• How Does This Fit Into Trump’s Broader Trade Strategy?
• What’s Next for the US-Japan Agreement?
• FAQs: US-Japan Trade Deal Standoff

The US and Japan are locked in a heated dispute over how to split the profits from their newly signed $550 billion trade and investment package. While both nations agree on the economic framework, tensions Flare over whether the US should claim 90% of the returns—a demand Japan calls "unacceptable." The deal, announced last Tuesday, includes tariffs and joint investments but faces backlash from US automakers and unions. Here’s a deep dive into the standoff, its implications, and why this could set a precedent for future trade negotiations.

What’s the Core Dispute in the US-Japan Trade Deal?

The US and Japan have agreed on a $550 billion economic package involving tariffs and joint investments, but the sticking point is profit distribution. Japan insists returns should reflect each country’s proportional contributions and risk exposure. Meanwhile, US officials are digging in, arguing Washington deserves 90% due to its "larger economic role" and investment structure. President TRUMP formally announced the deal last Tuesday, highlighting a 15% tariff on imported goods and Japan’s $550 billion investment pledge. A Japanese government official told Reuters on Friday that profit-sharing must align with "respective levels of contribution and risk."

Why Is Japan Pushing Back Against the 90-10 Split?

Japan’s chief trade negotiator, Ryosei Akazawa, dismissed the US proposal as "not a final decision," emphasizing that claims of Japan "handing over" $550 billion are misleading. The deal includes loans and guarantees from state-backed entities like the Japan Bank for International Cooperation (JBIC) and Nippon Export and Investment Insurance (NEXI). Akazawa’s remarks suggest Tokyo won’t accept terms that undervalue its financial and risk commitments. "This isn’t a one-way street," he implied—a rare public challenge to US demands.

How Are US Automakers Reacting to the Deal?

American car manufacturers are furious. The Detroit Big Three—GM, Ford, and Stellantis—warn the agreement creates unfair competition. Matt Blunt of the American Automotive Policy Council criticized the deal for imposing lower tariffs on Japanese cars with no US content. "This is a tough nut to crack," Blunt said, doubting US automakers will gain meaningful market access in Japan. Currently, US companies face 50% tariffs on imported steel and aluminum and 25% duties on vehicle parts unless exempt under existing pacts like USMCA. The new deal offers no such protections, leaving US automakers vulnerable.

What’s the Labor Union’s Stance?

The United Auto Workers (UAW) union blasted the deal as a "race to the bottom," arguing it fails to match labor standards negotiated in US auto plants. "If this becomes the blueprint for trade with Europe or South Korea, it’s a massive missed opportunity," the UAW stated. The union fears the agreement rewards cost-cutting over fair wages, echoing broader concerns about globalization’s impact on workers.

How Does This Fit Into Trump’s Broader Trade Strategy?

The administration is simultaneously negotiating similar deals with the EU and Asian nations. Earlier this week, Trump confirmed a new pact with the Philippines, slashing US import tariffs to 19%, and revealed a comparable agreement with Indonesia. The president also hinted at future EU tariffs ranging from 15% to 50%, calling for "straightforward" rates. These moves suggest a pattern: aggressive terms favoring US interests, but at the risk of alienating allies.

What’s Next for the US-Japan Agreement?

With both sides entrenched, the deal’s fate hinges on compromise. Japan’s resistance to the 90-10 split could force a renegotiation—or collapse talks entirely. Meanwhile, US industry backlash may pressure Trump to revisit terms. One thing’s clear: this isn’t just about money; it’s a power struggle over who sets the rules of global trade.

FAQs: US-Japan Trade Deal Standoff

What’s the $550 billion US-Japan trade deal about?

The agreement involves tariffs, joint investments, and profit-sharing, but disputes center on how to divide returns.

Why does the US want 90% of the profits?

US officials argue their "larger economic role" justifies the split, but Japan calls this unfair.

How are US automakers affected?

They face lower tariffs on Japanese imports without reciprocal benefits, risking unequal competition.

Could the deal fall apart?

Yes—Japan’s pushback and US industry opposition could derail negotiations.