US and Japan Clash Over Profit-Sharing in $550 Billion Trade Deal: What’s at Stake?

• Why Are the US and Japan at Odds Over Profit Sharing?
• What Does the US-Japan Trade Deal Include?
• How Are US Automakers Reacting?
• Is the 90-10 Profit Split Final?
• What’s Next for US Trade Policy Under Trump?
• FAQs: US-Japan Trade Deal Dispute

The US and Japan are locked in a tense disagreement over how to split profits from their newly signed $550 billion trade and investment package. While Japan argues for proportional risk-based sharing, the US insists on keeping 90% of the gains, citing its "larger economic role." The deal, announced by former President Trump, includes a 15% tariff on imports and major Japanese investments, but critics—including US automakers—warn of unfair competition and missed opportunities. Here’s a DEEP dive into the dispute and its implications.

Why Are the US and Japan at Odds Over Profit Sharing?

The heart of the conflict lies in how returns from the $550 billion economic framework will be divided. Japan’s government insists profits should reflect each nation’s proportional contributions and risk exposure. Meanwhile, US officials have pushed back, claiming Washington deserves 90% of the gains due to its "dominant economic role" and the structure of the investment. A Japanese official told Reuters the split should be based on "respective levels of contribution and risk," signaling a stalemate.

What Does the US-Japan Trade Deal Include?

Announced on Tuesday, the agreement imposes a 15% tariff on imported goods and secures Japan’s $550 billion investment commitment. The package also involves loans and guarantees from Japanese state entities like the Japan Bank for International Cooperation (JBIC) and Nippon Export and Investment Insurance (NEXI). However, the lack of protections for US automakers—facing 25–50% tariffs on steel, aluminum, and vehicle parts—has sparked backlash.

How Are US Automakers Reacting?

Detroit’s Big Three (GM, Ford, Stellantis) are sounding alarms. Matt Blunt of the American Automotive Policy Council warned the deal creates "uneven competition" by lowering tariffs on Japanese cars without requiring US content. The United Auto Workers (UAW) union called it a "race to the bottom," arguing it fails to match labor standards negotiated in US factories. "If this becomes the blueprint for trade with Europe or South Korea, it’s a massive missed opportunity," the UAW stated.

Is the 90-10 Profit Split Final?

Not necessarily. Japan’s chief trade negotiator, Ryosei Akazawa, dismissed claims that Tokyo is "handing over $550 billion," calling them "completely wrong." He emphasized the US proposal isn’t final, leaving room for renegotiation. Analysts suggest the deadlock could delay implementation, though neither side has threatened to withdraw yet.

What’s Next for US Trade Policy Under Trump?

The administration recently signed similar deals with the Philippines (19% import tariff reduction) and Indonesia, while proposing a 15–50% tariff range for the EU. TRUMP framed these moves as "straightforward" protections for US interests. However, critics argue the Japan deal sets a risky precedent, especially without reciprocal protections for key industries.

FAQs: US-Japan Trade Deal Dispute

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

The US wants 90% of profits, while Japan demands a split based on contributions and risk exposure.

How much is the trade package worth?

$550 billion, combining tariffs and Japanese investments.

Why are US automakers unhappy?

The deal lowers tariffs on Japanese cars without requiring US-made parts, potentially disadvantaging Detroit manufacturers.