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US-Japan Trade Deal Announced

The US and Japan reached a surprise trade agreement, announced at the G7.

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President Trump recently traveled to France for the G7 summit, which took place on August 24 and 25. The G7 is an international meeting of seven countries, including France, Germany, Italy, Canada, Japan, the United Kingdom and the Unites States.

On the eve of the summit, US and Japanese trade representatives held talks in Washington. It was widely anticipated that two of the world’s largest economies were going to announce a partial trade agreement, also known as an “early harvest,” before signing a more comprehensive trade pact.

During the final day of the G7, President Donald Trump and Japanese Prime Minister Shinzo Abe announced to reporters that they had reached an agreement in principle. The deal will concentrate on agriculture, industrial tariffs, and digital trade. The “very good news” for American farmers and ranchers is that the proposed arrangement is expected to open up Japan’s agricultural market to US goods to the tune of $7 billion.

The Deal

Shinzo Abe and Donald Trump

Japan will import more corn, wheat, pork, dairy, beef, and wine; corn is critical for Japan right now because of a ballooning pest problem that impacts its domestic products. In exchange, the US will slash tariffs on Japanese industrial products, excluding automobiles. For now, Tokyo and Washington have agreed to “core principles,” but the next step is putting it on paper.

“We have been working on a deal with Japan for a long time. It involves agriculture. It involves e-commerce. It involves many things. We’ve agreed in principle,” Trump said. “We’ve agreed to every point, and now we’re papering it and we’ll be signing it at a formal ceremony.”

The leaders told the press that they expect to sign officially in September at the United Nations General Assembly meeting.

The Reaction

The US-Japan trade handshake appeared to have come out of left field. Most observers had anticipated a drawn-out trade negotiation. But both men needed this victory: Trump is heading into an election year, and Abe is facing the possibility of a recession.

Recently speaking to a crowd of supporters in Pennsylvania, President Trump lamented Japan’s wheat imports, telling a crowd: “We send them wheat, wheat. That’s not a good deal. And they don’t even want our wheat.” He added that Tokyo buys wheat only “because they want us to at least feel that we’re okay. You know, they do it to make us feel good.”

The unhappy wheat industry tweeted immediately after his remarks:

“Mr. President, Japan is the #1 market for US wheat exports on average. They don’t buy our wheat because ‘they want us to feel okay.’ They buy it because it’s the highest quality wheat in the world. That’s not fake news.”

Meanwhile, the Japanese leadership had made it clear from the first day of talks that Tokyo would not concede its leverage without significant concessions in return and that any mini-deal would be unacceptable. But with an unpopular national sales tax on the horizon, falling exports, and declining foreign investment in Japanese financial markets, Abe eliminated the uncertainty that trade disputes create by verbally agreeing to a new one.

However, the prime minister is not out of the woods yet. Any trade development needs to be approved by the Japanese parliament.


*This article is adapted from “Japan Trade – Eastern Leverage Or Russian Roulette?” by Andrew Moran.
Andrew Moran

Economics Correspondent at and Andrew has written extensively on economics, business, and political subjects for the last decade. He also writes about economics at Economic Collapse News and commodities at He is the author of “The War on Cash.” You can learn more at

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