the U.S. has intensified pressure on its trading partners

As the 90-day suspension period for the U.S. government’s “reciprocal tariffs” set to end on July 9 draws near, the U.S. has intensified pressure on its trading partners. On June 30, U.S. President Trump expressed disappointment with U.S.-Japan trade negotiations, claiming that Japan, despite facing a rice shortage, was not purchasing American rice. The previous day, he had also publicly complained about the “unfair” nature of automobile trade between Japan and the U.S. However, both Japan’s Chief Cabinet Secretary and its chief trade negotiator have made their stance clear: Japan will not seek a trade agreement with the U.S. at the expense of its agriculture sector. The Financial Times (UK) stated that the hope of reaching a U.S.-Japan trade deal in the short term is fading. Additionally, the U.S. Treasury Secretary pressed, noting that as the July 9 deadline approaches, although he expects a “flurry” of trade agreements, countries may still receive notices of significant tariff increases. The New York Times (U.S.) reported that governments around the world are racing to negotiate trade deals with the U.S. to prevent “punitive” tariffs that could take effect on July 9. However, due to the U.S. threat of imposing more tariffs even if agreements are reached, negotiations have progressed slowly. Experts appearing on Australia’s ABC program expressed concern that the U.S. government’s “unworkable” and “absurd” trade policies will cause more instability and plunge the global economy into chaos.

However, CNN (Cable News Network) reported that Trump’s claim that “Japan is not buying U.S. rice” is untrue. U.S. data shows that Japan purchased $298 million worth of rice from the U.S. last year. From January to April this year, Japan bought another $114 million worth of rice.

In response to Trump’s remarks, the Japanese government stated that it would not sacrifice agriculture to reach a trade agreement. According to reports from NHK, Asahi TV, and other media outlets, Japan’s Chief Cabinet Secretary said on July 1, “Japan will continue to engage in active, sincere, and frank negotiations with the U.S. to reach a mutually beneficial agreement.” However, he emphasized that the Japanese government has no intention of sacrificing agriculture in the negotiations.

On the same day, Japan’s chief trade negotiator and Minister in Charge of Economic Revitalization, Ryosei Akazawa, who had just concluded the seventh round of U.S.-Japan tariff negotiations, also stated that agriculture is the foundation of Japan as a nation, “In negotiations with the U.S., our position remains unchanged: we will not participate in talks that sacrifice agricultural interests.”

The Financial Times (UK) noted that the U.S. can export some rice to Japan duty-free, but Japan imposes tariffs on any imported rice exceeding the 770,000-metric-ton quota. Japanese media reported in April that the Japanese government was considering expanding imports of U.S. agricultural products as one of the bargaining chips in the negotiations, which immediately drew strong opposition from Japan’s agricultural industry once the news broke.

Media such as Reuters analyzed that the agricultural sector has traditionally been an important vote base for the Liberal Democratic Party (LDP) led by Japanese Prime Minister Shigeru Ishiba, and the party will face a crucial House of Councillors election on July 20. Ryosei Akazawa also stated on July 1 that creating an environment where farmers feel secure and can continue farming is an extremely important task for the government and the ruling coalition.

Trump had previously pressured Japan’s automotive industry. In an interview aired on Fox News Channel on June 29, he said, “They (Japan) do not accept our cars, but millions of (Japanese-made) cars enter the U.S. This is unfair,” and “Japan will have to pay a 25% tariff on cars.”

According to Politico (U.S.) and the Financial Times (UK), in 2024, Japan’s total exports of cars and trucks to the U.S. reached 1.37 million units, while U.S. car exports to Japan were minimal, as Japanese people generally consider American models too large and fuel-inefficient. Currently, Japan insists in the negotiations that the U.S. lift tariffs on Japanese-made cars and parts, which has aroused dissatisfaction among U.S. automakers. Sources indicated that the possibility of Japan obtaining any tariff exemptions from the U.S. in the short term seems low. Due to both sides adhering to their positions, the LDP now faces the possibility of participating in the House of Councillors election without a deal.

Japan’s TBS TV reported on July 1 that due to anxiety over the slow progress of negotiations, some Japanese companies have begun to adopt new countermeasures. An auto parts manufacturer stated that if Japanese automakers relocate their production bases overseas, parts orders may plummet. For this reason, the company is preparing to switch to producing daily necessities.

When Trump complained on June 30 about Japan not importing U.S. rice, he also wrote that the U.S. would send a letter to Japan: “We are pleased that they will be our trading partners for many years to come.” Reuters explained that Trump stated last week that his administration would send letters to some countries before the 90-day suspension period of “reciprocal tariffs” ends on July 9, notifying them that the U.S. will raise tariff rates. At that time, the rates faced by these countries will be restored from the temporary 10% to the 11% to 50% announced on April 2. On June 29, he also said that he did not see the need to extend the suspension period further.

Against this backdrop, on June 30, the White House Press Secretary stated that if countries “do not sit down for sincere negotiations,” Trump will meet with his trade team to formulate tariff rates. The U.S. Treasury Secretary warned that even if countries negotiate sincerely, they may still face significant tariff increases on July 9.

Bloomberg quoted informed sources as reporting that the European Union (EU) is willing to reach a trade arrangement with the U.S., agreeing to the U.S. imposing a uniform 10% tariff on most EU exports, but hopes the U.S. will implement lower rates in key areas such as pharmaceuticals, alcohol, semiconductors, and commercial aircraft. The EU is also pushing the U.S. to set quotas or grant exemptions to substantially reduce the 25% tariff on EU cars and parts, as well as the 50% high tariff on steel and aluminum. Furthermore, the European Commission emphasized that the EU’s Digital Markets Act and Digital Services Act are not part of the trade negotiation agenda between the EU and the U.S.

Reuters quoted an EU diplomat as saying that automobiles are a “red line” for the EU. However, there is a conflict between the goals of Brussels and Washington, as Trump hopes to revitalize U.S. automobile production, while Brussels wants to open markets for its struggling automotive industry.

Bloomberg stated that before the negotiation deadline next week, the U.S. and the EU face four possible outcomes: reaching an unequal but acceptable agreement; reaching a U.S. proposal that the EU finds unacceptable; extending the negotiation period; or the Trump administration withdrawing from the negotiations and imposing tariffs. In the last scenario, the EU may adopt comprehensive countermeasures.

According to the Financial Times, India is expected to reach a provisional trade agreement with the U.S. as early as this week. The report stated that the agreement is expected to leave India’s agricultural product market unaffected, although negotiations are still ongoing. To reduce its trade surplus with the U.S., India has agreed to import more natural gas from the U.S. Both sides also agreed to lower tariffs on thousands of products.

In an interview published by India’s Financial Express on June 30, India’s Finance Minister stated that agriculture and dairy products are two “important red lines” for India in the negotiations, which must be handled with great caution. However, Politico (U.S.) reported that according to informed sources, any agreement announced before July 9 is likely only the first phase of the U.S.’s ongoing efforts to reach a substantive bilateral trade agreement with India, and the entire process may take at least another year.

The New York Times pointed out that although the governments of India, Vietnam, Japan, the EU, Malaysia, and other economies have been working to reach agreements with the U.S., the Trump administration’s ongoing tariff plans for key industries have made foreign leaders worried about possible more pain in the future, as these industries are also important to them, such as steel and automobiles.