Japan to resist Trump efforts to form trade bloc against China

TOKYO – Japan intends to push back against any US effort to bring it into an economic bloc aligned against China because of the importance of Tokyo’s trade ties with Beijing, according to current and former Japanese government officials.

Like many other countries, Japan is trying to get permanent relief from President Donald Trump’s tariffs by addressing US concerns in areas of bilateral trade, including automobiles and agriculture.

The officials, who asked not to be identified, said that Japan is pushing to strike a deal before the current 90-day reprieve in tariffs expires, with one person saying the country hopes to finalise an agreement around the Group of Seven summit in June. 

At the same time, the officials said Japan does not want to get caught up in any US effort to maximise trade pressure on China by curbing its own economic interaction with Beijing, which is Tokyo’s biggest trading partner and an important source of goods and raw materials.

Although the US has not made any specific requests to Japan regarding China, Tokyo would prioritise its own interests if that occurs, Japanese officials say.

One of the officials added that Japan has conveyed to China on multiple occasions that it does not fully align with the US on chip-related exports and semiconductor restrictions. 

Japan’s Foreign Ministry did not immediately provide comment upon a request by Bloomberg.

US Treasury Secretary Scott Bessent, who is playing a leading role in trade talks with Japan and other nations, said earlier in April that the US would seek to reach agreements with allies and “then we can approach China as a group”.

Bloomberg subsequently reported that the US is preparing to ask countries seeking tariff relief to reduce economic ties to China in a move to strengthen US leverage over Beijing as it tries to win concessions on trade. 

‘Resolutely opposes’

Japan’s lead trade negotiator, Mr Ryosei Akazawa, deflected a question about Mr Bessent’s comments on April 25.

“My mission is to request a review of the additional tariffs,” said Mr Akazawa, who is scheduled to return to Washington for a second round of talks with US officials soon. 

“The US may try to do something collectively with other nations that also reach a deal with the US. But that will be beyond my responsibilities.”

Japan is now weighing up its concessions ahead of the second round of trade talks. 

That could be made in agriculture, with the Yomiuri newspaper saying the government was considering buying more US corn, while the Nikkei said a boost in soybean imports was on the cards.

Public broadcaster NHK said the government was looking to present an overview of investments that Japanese carmakers were planning in the US.

Mr Katsunobu Kato, Japan’s finance minister, dampened speculation that the US would make requests over the weak yen, saying that foreign exchange targets had not been discussed during talks on April 24 with Mr Bessent.

As Japan gears up for the trade talks, Prime Minister Shigeru Ishiba is also seeking to cushion the blow that the US tariffs may have on the domestic economy. He announced an emergency economic package that will help smaller businesses and the agriculture industry.

But as Japan works towards closing a deal with the US, Chinese President Xi Jinping’s government has

warned countries against striking deals with the US

that also target Beijing, saying it “resolutely opposes any party reaching a deal at the expense of China’s interests”.

“We need to be very careful about economic security issues and the supply chain involving China,” Mr Taro Kono, a lawmaker in Japan’s ruling Liberal Democratic Party and former foreign minister, said in an interview with Bloomberg TV on April 23.

Rather than dialling back trade, Tokyo is in the process of trying to get China to resume imports of seafood and beef from Japan after bans imposed over health concerns.

A series of Japanese delegations are currently making trips to China or are planning to go in order to manage Tokyo’s relationship with Beijing. 

On April 23, Mr Tetsuo Saito, leader of the Komeito Party – a key member of the ruling coalition – passed a letter from Prime Minister Shigeru Ishiba for Mr Xi to China’s No. 4 official, Mr Wang Huning.

Afterward, Mr Saito said that both sides agreed to support the multilateral trading system and independently push the Trump administration to ease tariffs.

In a sign of Japan Inc’s commitment to the China market, Toyota Motor Corp this week agreed to open a new factory in Shanghai in 2027, with the company reportedly planning to invest around US$2 billion (S$2.63 billion) in the plant.

More pessimistic

Around 20 per cent of Japan’s total commerce is with China, larger than its trade with the US.

However, the US overtook China as an export destination for Japan in 2023, extending that lead in 2024.

Japanese firms have become more pessimistic on the opportunities in China, with many cutting back investments as their revenue falls due to the weak Chinese economy and other factors. 

Japanese manufacturing was hit hard when China restricted the export of rare earths to Japan in 2010 amid a political dispute.

After that, Japanese industry and government made a concerted push to diversify supply, investing in Australia and elsewhere to reduce some of their reliance on China.

Japan is wary of similar restrictions after Beijing earlier in April added seven rare earths to its export control list in response to punitive tariffs imposed by Washington.

Mr Saito said he asked Chinese officials to make the “correct decisions” with regard to the handling of rare earths.

Japan needs to walk a tightrope over US-China relations because it also leans heavily on the US as it sole formal security ally.

The largest overseas US military troop presence is based in Japan, and Mr Trump has in recent days resumed his longstanding demand for Tokyo to pay more for US military bases.

But any demands from Washington on Tokyo to downgrade its economic relationship with China would potentially deal Japan a major economic blow.

“It’s going to be really, really bad for Japan if it sees a drop in trade both with the US and China,” said Dr Yu Uchiyama, a professor of political science at the University of Tokyo. “If policymakers say let’s abandon China, business people will of course oppose it.” BLOOMBERG