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

• Why Are the US and Japan Deadlocked Over Profit Sharing?
• How Are US Automakers Reacting to the Deal?
• What’s Next for US Trade Talks with the EU and Asia?
• FAQs: US-Japan Trade Deal Standoff

The US and Japan are locked in a heated dispute over how to split profits from their newly signed $550 billion trade and investment pact. While both nations agreed on the broad economic framework, tensions Flare over Washington’s demand for 90% of returns, citing its "greater economic role." Japan insists profits should reflect proportional contributions and risk. Meanwhile, US automakers and labor unions blast the deal as "lopsided," fearing it undermines domestic industries. Here’s a deep dive into the standoff and its global implications.

Why Are the US and Japan Deadlocked Over Profit Sharing?

The US-Japan trade deal, announced last Tuesday, includes tariffs and joint investments worth $550 billion. But the celebration was short-lived as a rift emerged over profit distribution. Japanese officials argue returns should mirror each nation’s financial input and risk exposure. "Some claim Japan is just handing over $550 billion—that’s completely off the mark," said Ryosei Akazawa, Japan’s lead trade negotiator. The deal involves loans and guarantees from Japanese state-backed entities like the Japan Bank for International Cooperation (JBIC).

On the other side, US negotiators dug in their heels, demanding 90% of profits. Their reasoning? America’s "larger economic footprint" and the structure of investments. President TRUMP touted the pact’s 15% tariff on imported goods and Japan’s $550 billion investment pledge. Yet, behind closed doors, the math is far from settled.

How Are US Automakers Reacting to the Deal?

Detroit isn’t cheering. The American Automotive Policy Council—representing GM, Ford, and Stellantis—warned the agreement creates "uneven competition." Matt Blunt, the council’s president, criticized provisions that lower tariffs for Japanese cars with minimal US-made parts: "This deal could hurt US firms. We’ll scrutinize the fine print, but meaningful market penetration in Japan seems unlikely."

Currently, US tariffs stand at 50% for imported steel/aluminum and 25% for auto parts and finished vehicles, unless exempt under deals like USMCA. The new pact lacks similar protections, sparking fury from the United Auto Workers (UAW) union. "If this becomes the blueprint for Europe or South Korea, it’s a massive missed opportunity," UAW stated. "We need deals that raise standards, not race to the bottom."

What’s Next for US Trade Talks with the EU and Asia?

The Trump administration isn’t slowing down. This week, it confirmed a new 19% tariff deal with the Philippines (zero tariffs on US exports there) and a similar pact with Indonesia. April’s "Liberation Day" had already set a 10% baseline tariff for all US trade partners. Now, Trump hinted at variable EU tariffs ranging from 15% to 50%, calling it "pure and simple" during an AI summit in Washington.

Globally, the Japan dispute sets a precarious precedent. As Akazawa noted, the 90-10 revenue split isn’t final—but the stakes are sky-high. With US labor and industry pushing back, and Japan refusing to blink, this $550 billion game of chicken could redefine trade dynamics.

FAQs: US-Japan Trade Deal Standoff

What’s the core conflict in the US-Japan trade deal?

The US wants 90% of profits, while Japan insists returns should align with each nation’s financial contributions and risk.

Why are US automakers opposing the agreement?

They argue it unfairly benefits Japanese imports by reducing tariffs without ensuring reciprocal advantages for American-made vehicles.

How might this impact future US-EU trade talks?

Trump’s proposed 15-50% EU tariffs suggest a flexible, aggressive approach—potentially complicating negotiations.