Trump's Arbitrary 'Reciprocal' Tariffs are No Way to Treat an Ally

Is this how the world's largest economic power behaves? United States President Donald Trump's tariffs are a whole different level of recklessness compared to the first Trump administration. The high tariffs that are a centerpiece of "Trump 2.0" ruthlessly target allies, not just rivals. These measures reek of self-righteousness, and we are deeply concerned and disappointed.

President Trump has announced massive "reciprocal" tariffs on trading partners. He says they are in response to tariff and non-tariff barriers imposed by each country. From Saturday, April 5, a 10% baseline tariff was imposed on all countries and regions. Expanded to include additional country-specific tariffs, effective April 9, Japan's additional tariff rate comes to a whopping 24%.

These aggressive tariff measures could end up destroying the global trade order. They are a truly ill-conceived strategy that will depress international trade and the global economy, along with the US economy. Japan must unite with other countries and respond firmly to the US.

A Major Blow to Both Japan and America

Trump had already announced a 25% tariff increase on imported automobiles, which also went into effect on April 3. He had previously imposed additional tariffs on steel and aluminum products as well. With Trump's "reciprocal" tariffs taking effect on April 9, Japan is on both lists of targeted countries.

Prime Minister Shigeru Ishiba's administration had sought an exemption for Japan from the new tariffs, given our nation's contributions to direct investment and job creation in the United States. But that strategy has completely failed. The reciprocal tariffs on Japan are even more onerous than those hitting the European Union (EU) and some other countries. In other words, it is the worst possible development.

America is Japan's largest export market, and the new tariff burden will hit small and medium-sized subcontractors as well as exporters. Daiwa Institute of Research estimates that reciprocal tariffs will push down Japan's real gross domestic product by 0.6% in 2025. In 2024, Japan's economy had a real GDP growth of just 0.1%, so the impact will certainly be severe.

What are These Tariffs?

The stated basis for the reciprocal tariffs is a US calculation that Japan's tariff rate, including non-tariff factors considered to affect US goods, is equivalent to 46%. However, it is difficult to understand that reasoning as Japan has proceeded with eliminating tariffs on industrial goods and other products imported from the US. The American side regards non-tariff barriers as a problem, but the validity of that view is questionable.

*Mr Trump talks about his reciprocal tariff plan at the White House on April 2. (©Reuters via Kyodo)*

For example, the US has criticized Japan's motor vehicle safety standards. It argues that Japan's strict regulations prevent consumers from purchasing American cars. But it is natural for each country to set safety standards according to its traffic conditions. Imported cars are not excluded from Japan, as is readily evident from all the European cars on Japan's roads.

Then, there is the claim that Japan imposes a 700% tariff on American rice. In reality, that argument does not take into account the minimum access quota for duty-free imports. Also, the trade agreement concluded between Japan and the US during the first Trump administration specified that the US would not impose additional tariffs on Japanese automobiles.

Mr Trump's present stance of trampling his own previous administration's promises at will is extremely dangerous.

Separating Fiction from Fact

The Trump administration's position that tariffs will usher in a "Golden Age for America" is full of unsubstantiated assumptions and contradictions. Trump claims that tariffs will block the export offensives by other countries that are "exploiting" America's wealth and revive the US manufacturing industry. But this is a lopsided view.

Access to inexpensive, high-quality imported goods has supported the robust consumption and manufacturing activities of the American people. It is bizarre to ignore this fact and believe that "trade deficits = loss."

Instead, portions of the additional tariffs will inevitably be passed on to US consumers in the form of higher prices. This could exacerbate the inflation that Trump repeatedly referred to in criticizing the Biden administration.

Furthermore, the US may simultaneously face inflation and an economic downturn by imposing retaliatory tariffs on China and the EU. This leads to the opposite of ushering in the "Golden Age for America" that Trump speaks of. President Trump must directly address that risk.

Japanese Government Must Support Its Businesses

Meanwhile, Prime Minister Ishiba must accept that his reluctance to confront the US offensive has accomplished nothing. He must seriously rethink his strategy. The government has already indicated its intention to support hiring and financing by Japanese companies. Every possible measure should be taken to minimize the impact of the Trump tariffs on Japan's companies and economy.

It is also important for the Ishiba administration to make a compelling case for Japan to be exempted from the additional tariffs. At a recent press conference, Ishiba indicated his intention to hold direct talks with Trump if necessary. In that case, he has a responsibility to act immediately.

Unilaterally imposing tariffs violates international rules. However, it will be difficult to persuade Trump to change his mind. As things now stand, the World Trade Organization's dispute settlement system is also dysfunctional. Nevertheless, it would probably be advisable for Japan to adopt a tough stance by filing a complaint with the WTO.

The Customs Tariff Act includes provisions for imposing retaliatory tariffs with WTO approval. However, Japan cannot simply aim for retaliatory tariffs, given the disparity in economic power and hope for the national security deterrent of the Japan-US alliance. Nonetheless, what and whether to take any countermeasures must be carefully considered.

The looming presence of China is something to keep in mind at all times. Trump has also announced high tariff rates for countries in Southeast Asia and other regions. If these countries seek to avoid "US risk" and move closer to China, this would impact the economic security of both Japan and America. Japan should sound the alarm to the Trump administration regarding this point.

(Read the editorial in Japanese.)

Author: Editorial Board, The Sankei Shimbun