Japan’s Ishiba heads to G-7 to press Trump to drop auto tariffs

TOKYO - Japanese Prime Minister Shigeru Ishiba is heading to Canada on June 15 for trade talks with US President Donald Trump, hoping to persuade him to drop trade tariffs that have imperilled Japan’s car companies and threaten to undermine his fragile government.

The two are expected to meet on the sidelines of a summit of the Group of Seven (G-7) nations in Kananaskis, Alberta, for their second in-person encounter. It follows a sixth round of high-level trade talks in Washington on June 13.

Japan’s top tariff negotiator Ryosei Akazawa said he explored the possibility of an deal in detailed meetings with US Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick.

The trick for Mr Ishiba, who spoke with Mr Trump by phone on June 13, will be to get the US President to drop the 25 per cent tariff he imposed on Japanese cars, as well as a paused 24 per cent across-the-board levy that Mr Trump calls a reciprocal tariff, without making concessions that could hurt the Japanese Prime Minister’s public support at home.

Returning to Tokyo with no deal would be better politically than conceding too much, analysts say.

“If it goes badly, it could even be seen as a positive for Ishiba, standing up to Trump and standing up for his country when he’s under assault,” said Professor Michael Cucek, a political science professor at Temple University in Tokyo.

Mr Ishiba and his ruling Liberal Democratic Party face an upper house election in July that comes after a lower house loss in November 2024 that left him reliant on the support of other parties to stay in power.

Another poor electoral result could bring down his government and would force Mr Trump to reset trade talks with a new Japanese administration.

“The most important thing is that Ishiba does not cave in for a bad (auto) deal,” said Mr Joseph Kraft, a financial political analyst at Rorschach Advisory in Tokyo.

“I expect there will be some kind of deal, although it could be haphazard. Trump needs some good news and I don’t think he has much interest in G-7 activities.”

Failing to reach an agreement in Canada might not have an immediate economic impact on Japan, but tariffs that stay in place will eventually drag down growth, said Ms Asuka Tatebayashi, a senior analyst at Mizuho Bank.

“If you look at the data for car exports to the US for April, it was quite striking. The volume in dollars was down by nearly 5 per cent, but the number of cars has increased a lot,” she said.

“It means either they are selling only cheap cars or the manufacturers are absorbing the cost. I think the latter is the case and this is not very sustainable.”

Tariffs could shave 0.9 per cent off Japan’s gross domestic product, Mizuho Research and Technologies estimated in a report in April. REUTERS