Japan is likely to request an exemption from tariffs that Mr. Trump has threatened to put on foreign cars and car parts. The president has a deadline of May 18 to decide whether to place levies on foreign cars — a move he says would help bolster the American auto industry. But Mr. Trump could delay the tariffs for countries with which the United States is negotiating — or agree to a carveout from any tariffs if Japan gives Washington a big enough victory.
Avoiding those tariffs is critical for Japan, which supplies about one-fifth of American vehicle imports by value, the country’s second-largest source of imports after Mexico.
A 25 percent tariff on imported automobiles would raise the average price of a compact car by $1,408 to $2,057, according to estimates by Mary E. Lovely and other economists at the Peterson Institute for International Economics. Such a price jump are likely to depress sales of foreign-made cars and encourage Japanese automakers to move more production to the United States.
“If I’m Abe, this trade thing is kind of a pain in the neck to me,” said Clyde Prestowitz, a former Reagan administration official, adding that Japan was more concerned with security issues in China and North Korea. “What I need to do is get Trump off my back.”
Mr. Trump’s primary demands for Japan are likely to center on access to Japan’s agricultural markets for farmers that have been hit hard by his trade battles with China, Canada, Mexico and Europe. Mr. Trump wants Japan to reduce its exports and manufacture more cars at factories built in the United States, to reduce a large bilateral trade deficit.
But the president is also facing pressure from an important constituency — American farmers and ranchers — who say Washington’s withdrawal from the Trans-Pacific Partnership has put them at a disadvantage in the Japanese market. Competitors in Canada, New Zealand and Australia, which are part of the partnership, enjoy lower tariffs when selling into Japan, as does Europe, which has its own Japanese trade pact.
Beef from Australia, New Zealand, Canada and Mexico is now charged a 26.6 percent tariff in Japan, compared with a rate of 38.5 percent for American products, and data show that American goods are already losing market share. That is a disadvantage that will continue to grow as further tariff cuts from the Pacific deal are phased in, said Kent Bacus, senior director of international trade at the National Cattlemen’s Beef Association.