Japan’s Tariff Negotiation Misstep Weakens Position Ahead of US Deadline

Japan's insistence on complete exemption from US tariffs has backfired, leaving negotiators with diminished leverage as higher duties take effect. Takeshi Niinami, a key advisor to Prime Minister Shinzo Abe, told the Financial Times that Tokyo's all-or-nothing approach underestimated President Trump's resolve. The 25% tariffs now imposed—one percentage point higher than April's proposal—come as Japan faces a shrinking window before July 20 upper-house elections.

"They thought time was on Japan's side. It was a big mistake," Niinami said of negotiators who rejected a potential 10% compromise tariff. With US-imposed duties on Asian trading partners set to escalate August 1, HSBC analysts note Tokyo's dwindling capacity for concessions. The failed talks leave Japanese exporters vulnerable during critical election preparations, where the ruling party risks losing its parliamentary majority.