Japanese Prime Minister Shigeru Ishiba returned empty-handed from a critical meeting with U.S. President Donald Trump in Canada, failing to reach a breakthrough in the ongoing Japan-U.S. tariff negotiations. The meeting, held on the sidelines of the G7 summit, was expected to finalize a deal on steep tariffs imposed by the U.S., particularly on automobiles.
With a national election looming, Ishiba faces a political dilemma. He must appear strong on foreign policy and avoid concessions that could harm Japan’s key industries—especially autos—while also preserving Japan’s image as a leader in free trade.
“The two of us negotiated to the greatest extent possible,” Ishiba told reporters after the half-hour meeting. “We spoke our hearts out to protect each other’s national interests.”
Autos remain the most contentious issue. Japan has pushed for the removal or reduction of the 25% tariff on auto exports, imposed by the Trump administration as part of its “America First” trade agenda. Japan exports roughly 1.38 million vehicles to the U.S. annually, making the sector vital to its economy.
Despite six rounds of ministerial-level talks since April, the two sides could only agree to “accelerate negotiations.” The lack of progress was seen as a major setback for Ishiba, whose coalition already lost its lower house majority. With upper house elections set for July 20, he cannot afford to appear weak in the face of U.S. demands.
Trade expert Junichi Sugawara of Owls Consulting Group said the Japan-U.S. tariff negotiations failed partly because Japan’s proposals weren’t convincing enough for Trump. “It boils down to whether Japan can present plans strong enough to prompt Trump to say ‘yes,’ especially in areas like energy investment and economic security,” Sugawara noted.
Japan has repeatedly urged the U.S. to reconsider its aggressive tariff strategy. In past negotiations under Trump’s first term, Japan avoided auto tariffs by offering concessions on U.S. agricultural products. This time, however, Ishiba held firm.
“Accepting the 25% auto tariff would have triggered backlash from labor unions and industry groups, damaging Ishiba’s election chances,” said Hideo Kumano, chief economist at Dai-ichi Life Research Institute. He added that avoiding a rushed deal is a wiser strategy, especially while observing how other nations handle U.S. pressure.
Still, the economic consequences could be significant. Major carmakers may weather the storm, but smaller parts suppliers face uncertainty. A prolonged trade standoff could also harm the U.S. economy, potentially leading Trump to reconsider.
Ishiba emphasized the diplomatic dimension of these talks. He told lawmakers that when meeting with foreign leaders, much of the discussion revolves around the U.S. president. “We are negotiating representing Asia,” he reportedly said.
Ahead of the summit, Ishiba held talks with many members of the Trans-Pacific Partnership (TPP), a pact Japan salvaged after Trump withdrew the U.S. in his first term. In a recent speech, Ishiba vowed to expand the TPP to include more ASEAN nations and even the European Union.
Sugawara warned that with the U.S. using economic coercion, Japan must reduce its overreliance on the American market. “The TPP, formally the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, offers Japan a path to diversify,” he said.
“Japan should prioritize talks with the U.S., but also maintain dialogue with ASEAN and Europe. They are facing similar pressure,” Sugawara added. “While full removal of the auto tariff may be unrealistic, Tokyo can still seek a balanced compromise that satisfies both sides.”
