6 Key Takeaways From The U.S.-Japan Trade Deal
The United States and Japan finalized a limited trade agreement on Monday, in a deal that wins back some benefits American farmers lost after President Trump pulled the U.S. out of the Trans-Pacific Partnership (TPP) during his first week of office in 2017.
Here are the key takeaways:
- The trade deal will reportedly slash tariffs on $7 billion worth of American agricultural products (cheese, wine, beef, pork, wheat and almonds), allowing farmers the same access as TPP competitors in New Zealand, Australia and Canada.
- In return, the U.S will lower tariffs on a host of Japanese industrial goods.
- Some dairy products were left out of the deal, like butter and evaporated milk, and won’t get the same access to Japan’s consumers as they did under the TPP.
- While the limited trade agreement rewards farmers, it notably does little to resolve existing or additional auto tariffs, with the U.S. maintained its levy of 2.5%.
- The agriculture-centered deal also leaves out some other big U.S. exports to Japan—such as aircraft, liquefied propane gas and semiconductor manufacturing equipment, while other excluded products include rice, bourbon and whiskey.
- The biggest improvement from the TPP was a market-opening agreement on $40 billion worth of digital trade signed between the two countries.
Crucial quote: Trump called the new trade deal with Japan “a huge victory for America’s farmers, ranchers and growers.”
What to watch for: Whether a more comprehensive agreement is signed in 2020. Trump has reportedly said that the two countries are working on doing so, with the difference on auto tariffs as the main sticking point for both sides still to be resolved. Motor vehicles and parts are by far Japan’s largest export to the U.S., at $56 billion in 2018.