Japan sets up task force for US trade talks as tariff risk clouds economy

TOKYO – Japanese Prime Minister Shigeru Ishiba on April 11 set up a task force to oversee trade negotiations with the United States, headed by his close aide and Economy Minister Ryosei Akazawa, who domestic media said hopes to visit Washington next week.

While government officials have revealed little about Tokyo’s negotiating strategy with Washington, lawmakers have begun pressuring the government to take steps to cushion the potential economic blow from the US tariffs.

The ruling coalition, consisted of Mr Ishiba’s Liberal Democratic Party (LDP) and its partner Komeito, is considering requesting a cut to Japan’s sales tax rate, the Yomiuri newspaper reported on April 11.

The tax cut will be put in place temporarily and target food items, which have seen prices rise steadily, the paper said, citing sources close to Komeito.

“The most effective measure is to directly ease the burden of households and companies with tax cuts,” Komeito head Tetsuo Saito said at his party’s meeting on April 10, according to Yomiuri.

As implementing tax cuts would take time as doing so would need parliament to pass legislation, the government should also deliver cash payouts to households, he was quoted as saying.

But some LDP officials are cautious of cutting the sales tax as the levy is a key source of revenue to pay for ballooning social welfare costs of Japan’s rapidly ageing population, the Yomiuri said.

Japan’s sales tax rate is currently 10 per cent, with a lower 8 per cent rate applied to food items.

Several domestic media, including the Nikkei newspaper, have also reported on April 10 that the government hopes to send Mr Akazawa to Washington next week to kick-start tariff talks with the US. REUTERS