US, Japan remain at odds over how to split trade deal profits

The United States and Japan are at odds over how to divide profits from a newly signed trade and investment package announced last Tuesday. Both governments have agreed to a $550 billion economic framework involving tariffs and joint investments, but there’s a rift over how returns from the deal will be shared between the two nations.

Japan insists that profit-sharing must reflect the proportional contributions and risk exposure of each side. Meanwhile, US officials put their foot down, asserting that Washington should retain 90% of the gains for its “bigger economic role” and the structure of the investment.

President Donald Trump formally announced the agreement on Tuesday, touting a 15% tariff on imported goods and Japan’s $550 billion investment commitment. On Friday, a Japanese government official told Reuters that returns from the deal will be shared based on “respective levels of contribution and risk borne by each side.” 

US-Japan trade agreement in jeopardy over returns disagreement

During a Friday press briefing, Japan’s lead trade negotiator, Ryosei Akazawa, said the US proposal for a 90-10 revenue split is not necessarily “a final decision.”

“Some people are saying Japan is simply handing over $550 billion, but such claims are completely off the mark,” Akazawa stated.

According to Reuters, the Japanese-US trade package includes loans and guarantees provided by state-backed entities Japan Bank for International Cooperation (JBIC) and Nippon Export and Investment Insurance (NEXI).

Among the naysayers of Trump’s agreement with Japan are US automakers, who almost immediately bashed some provisions of the terms when the POTUS made the announcement. They are reportedly disconcerted about the tariff structure on vehicles and raw materials.

Matt Blunt, president of the American Automotive Policy Council that represents Detroit’s General Motors, Ford, and Stellantis, warned that US firms would face uneven competition under the agreement. 

“We need to review all the details of the agreement, but this is a deal that will charge lower tariffs on Japanese autos with no US content. Tough nut to crack, and I’d be very surprised if we see any meaningful market penetration in Japan,” Blunt reckoned.

US companies currently face a 50% tariff on imported steel and aluminum, and a 25% duty on vehicle parts and finished automobiles, unless exempt under existing agreements like the United States-Mexico-Canada Agreement (USMCA). The new deal with Japan does not offer similar protections, according to industry leaders.

The United Auto Workers (UAW) union has also lambasted the “angering” agreement, propounding that the deal fails to impose standards equivalent to those negotiated by American labor at GM, Ford, and Stellantis.

“If this becomes the blueprint for trade with Europe or South Korea, it will be a major missed opportunity,” the UAW said, “We need trade deals that raise standards, not reward the race to the bottom. This deal does the opposite.”

Trump administration still in talks with the EU, Asia nations

Earlier this week, the Trump administration confirmed a new trade deal with the Philippines, which will see US imports from the country taxed at 19%, and American exports to the Philippines will face no import duties. He also disclosed a similar arrangement with Indonesia, of a 19% tariff imposed on incoming goods.

April’s “Liberation Day” tariffs had introduced a baseline 10% tariff on all American trading partners. After several pauses and negotiations, Trump said that future tariffs for the European Union (EU) would fall within a 15% to 50% range, depending on the partner.

“We’ll have a straight, simple tariff of anywhere between 15% and 50%,” Trump said Thursday at an artificial intelligence summit in Washington.

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