Lost in the shuffle this past week was one piece of good news for Trump: a tentative trade deal with Japan that he and Japan’s PM Shinzō Abe signed in New York on the sidelines of the UN General Assembly meeting. While it is largely a favorable deal, it does not do too much and leaves the most difficult issue to be resolved by later negotiation, namely regarding the auto industry.
Trade restrictions are lowered on a variety of agricultural goods, including pork, beef, wheat, corn, and some fruits the US exports (but not soybeans), and on a few Japan exports including green tea, persimmons, and soy sauce.
In the industrial area, restrictions are lowered on machine tools from Japan and some scattered others. Restrictions are also lowered on digital products going both ways. I do not know how much this will increase trade flows overall each way.
This is good news especially for many farmers, a main concern of Trump’s although not soybean farmers, with, if anything, they possibly suffering from the lowering of barriers on soy sauce from Japan, which will hit Kikkoman in southern Wisconsin.
Of course autos are a very large item involving trade between the two countries, and there is no change on that one.
The final irony, of course, is that most of this, especially in the agricultural area, was part of the TPP that the US withdrew from. So basically this resembles the USMCA NAFTA replacement largely and simply putting in place the changes with other nations that would have happened anyway if the US had not withdrawn from the TPP. In short, it is undoing Trump’s own handiwork from early in his administration, although that point is not being emphasized.
“Trade restrictions are lowered on a variety of agricultural goods, including pork, beef, wheat, corn, and some fruits the US exports (but not soybeans)”
I checked with Census and we exported $12.5 billion of agricultural goods to Japan in 2018 of which about $1 billion was soybeans.
Compare that to our ag exports to China which were $19.9 billion in 2016 but fell to $8.1 billion in 2018. Of course we exported $14.2 billion of soybeans in 2016 to China but that figure dropped to $3.1 billion in 2018.
If we exclude soybeans, our ag exports to Japan have exceeded our ag exports to China. But our exports of soybeans to China dwarfed all of this before Trump’s stupid trade war.
The US is enamored with driving too big, too fast, too often suvs and pickup trucks which are not abundant in Japan automakers offerings. Toyota Camrys and Honda Civics/Accords followed up by Nissan favs may benefit. People will buy them as they have a cult following. Machine tooling (CNC, etc.) from Japan and other places killed off the US similar industry in the eighties. I started to see Mazak replacing Cincinnati Milacron in the shop back then. American manufacturing of large machine tools mostly disappeared by 2000.
Then too, my commentary is not really to the point of your post which is basically Trump undoing his earlier handiwork on the TPP its impact. I hope you do not mind my small addition.
Did the new agreement incorporate international arbitration for resolving disputes? That was a major sticking point for Democrats during the 2016 election; they were opposed to it.
Thanks for posting. I care about this.
I dug around and have seen no mention anywhere of anything regarding arbitration in this agreement as it stands. Again, supposedly there will be more negotiating, with ongoing disagreement about autos the big issue. But Trump has been given something to show to his ag supporters.
The key words were “it does not do too much and leaves the most difficult issue to be resolved by later negotiation, namely regarding the auto industry.” Anything for a win…even if it is a ‘pass’.