The news sent Tokyo-listed stocks soaring by 7%, nearly reversing the previous day’s sharp decline in the Japanese market. The surge in equities followed the announcement of the high-level talks, signaling investor optimism that the tariff dispute would be addressed in a way that preserves Japan’s vital economic interests.
In the 25-minute conversation between Trump and Ishiba, the two leaders agreed to initiate negotiations aimed at resolving trade tensions. Following the call, Trump posted a message on his Truth Social platform, reiterating his longstanding complaints about Japan’s trade practices. “They don’t take our cars, but we take MILLIONS of theirs. Likewise Agriculture, and many other ‘things.’ It all has to change, but especially with CHINA!!!,” Trump wrote.
The Financial Times reported that Ishiba swiftly appointed Japan’s economic revitalisation minister, Ryosei Akazawa, as the country’s chief negotiator for the talks, which are expected to begin “very soon.” Japan, which depends heavily on its automotive sector, is particularly keen to protect this industry, which is a cornerstone of its economy.
On the U.S. side, Treasury Secretary Scott Bessent and U.S. Trade Representative Jamieson Greer are set to lead the negotiations. Bessent had already signaled Japan’s priority status for talks, explaining to Fox News on Monday that Japan “came forward very quickly” in response to the tariff threats.
Akazawa’s remarks to the media on Tuesday also raised expectations that the negotiations could extend beyond tariffs to include issues such as the dollar-yen exchange rate, a topic of growing concern for the Trump administration. Japan has maintained a strong alliance with the U.S., but the tariffs — including a 24% levy on Japanese imports and 25% on vehicles — have placed considerable strain on the relationship.
Ishiba has described the tariffs as a “national crisis” for Japan, and warned that the threatened levies could put the flow of Japanese investment into the U.S. at risk. Japan is the largest foreign investor in the U.S., and analysts caution that continued trade friction could undermine this critical economic link.
Takeshi Yamaguchi, an economist at Morgan Stanley MUFG Securities, suggested that U.S.-China tensions might actually help propel U.S.-Japan negotiations. He noted that Japan could propose measures to reduce the U.S. trade deficit, which the Trump administration has criticized, including increasing imports of U.S. agricultural products, defense equipment, and energy.
In a further sign of potential U.S. openness, Trump has ordered a new national security review of Nippon Steel’s proposed $15 billion takeover of U.S.-based U.S. Steel. The review, which will be led by the U.S. Treasury Department, is set to provide a recommendation within 45 days. The deal had previously been blocked by the Biden administration in January, but Nippon Steel executives have continued talks with U.S. officials, negotiating a framework where the Japanese company would acquire a majority stake in U.S. Steel. This move sent Nippon Steel’s stock up by as much as 10.5% in early Tuesday trading.
As the U.S. and Japan prepare to enter crucial trade talks, the outcome of these negotiations will be closely watched not just for their economic implications but also for the broader geopolitical impact. The Financial Times highlights that the success or failure of these discussions could set the tone for future trade relations between the two countries and shape the dynamics of the global trade environment.
