The US-Japan Trade Agreement: What You Need to Know

In a move that stunned many global trade observers, the United States and Japan announced a new trade agreement on September 25,2019. The negotiations had been ongoing for months, and the result was seen as a win for both countries. The deal would significantly lower tariffs on a range of goods, including agricultural products, industrial goods, and digital services.

For Japan, the agreement means securing continued access to one of their largest export markets. The US remains Japan`s second-largest trading partner, with exports to the United States accounting for roughly 20% of Japan`s total exports. Lowering tariffs on Japanese goods in the United States could help boost exports and benefit Japanese farmers and other producers.

For the United States, the agreement brings several benefits. For one, there is the opportunity to increase exports to Japan in various areas, including agriculture, where the United States has long complained about Japan`s high tariffs. Additionally, the agreement helps to address the US trade deficit with Japan, which stood at $67.6 billion in 2018, according to the US Census Bureau.

Perhaps most significantly, the agreement helps to cement the United States` strategic relationship with Japan – a relationship that has been under pressure in recent years. Tensions have risen between the two countries in recent years, with the US pushing Japan to take a tougher stance on trade with China and to shoulder more of the burden of military defense in the Asia-Pacific region.

The deal also comes at a time of growing uncertainty in global trade. The World Trade Organization (WTO) is struggling with a backlog of cases and an increasingly hostile environment for trade negotiations. In this context, bilateral trade agreements, such as the US-Japan agreement, are increasingly seen as a way to mitigate risk and avoid trade wars.

Of course, the agreement is not without its critics. Some have questioned whether the deal goes far enough in addressing trade imbalances between the two countries. Others have argued that the deal could undermine other countries` access to the Japanese market and set a dangerous precedent for bilateral trade agreements.

Regardless of these criticisms, the US-Japan trade agreement is a significant development in global trade relations. It underscores the importance of bilateral trade agreements and the need to strengthen strategic relationships in an increasingly uncertain world. Only time will tell whether the agreement is a win for both countries, but for now, it seems like a step in the right direction.