Japan creates jobs in US and may avoid tariffs, says prime minister

Tokyo — Japanese Prime Minister Shigeru Ishiba expressed optimism on Sunday that his country could avoid higher US tariffs, saying President Donald Trump had “recognised” Japan’s huge investment in the US and the American jobs that it creates.

At his first White House summit on Friday, Ishiba told public broadcaster NHK, he explained to Trump how many Japanese automakers were creating jobs in the US.

The two did not specifically discuss auto tariffs, Ishiba said, though he said he did not know whether Japan would be subject to the reciprocal tariffs that Trump has said he plans to impose on imports.

Tokyo has so far escaped the trade war Trump unleashed in his first weeks in office. He has announced tariffs on goods from Canada, Mexico and China, though he postponed the 25% duties on his North American neighbours to allow for talks.

The escalating trade tensions since Trump returned to the White House on January 20 threaten to rupture the global economy.

Ishiba said he believed Trump “recognised the fact Japan has been the world’s largest investor in the US for five straight years, and is therefore different from other countries”.

“Japan is creating many US jobs. I believe (Washington) won’t go straight to the idea of higher tariffs,” he said.

Ishiba voiced optimism that Japan and the US can avoid a tit-for-tat tariff war, stressing that tariffs should be put in place in a way that “benefits both sides”.

“Any action that exploits or excludes the other side won’t last,” Ishiba said. “The question is whether there is any problem between Japan and the US that warrants imposing higher tariffs,” he said.

Japan had the highest foreign direct investment in the US in 2023 at $783.3bn, followed by Canada and Germany, according to the most recent US commerce department data.

Trump pressed Ishiba to close Japan’s $68.5bn annual trade surplus with Washington but expressed optimism this could be done quickly, given a promise by Ishiba to bring Japanese investment in the US to $1-trillion.

On Sunday, Ishiba identified liquefied natural gas, steel, AI and vehicles as areas that Japanese companies could invest in.

He also touched on Trump’s promise to look at Nippon Steel investing in US Steel, as opposed to buying the storied American company — a planned purchase opposed by Trump and blocked by his predecessor, Joe Biden.

“Investment is being made to ensure that it remains an American company. It will continue to operate under American management, with American employees,” Ishiba said. “The key point is how to ensure it remains an American company. From president Trump’s perspective, this is of utmost importance.”

On military spending, another area where Trump has pressed allies for increases, Ishiba said Japan would not increase its defence budget without first winning public backing. “It is crucial to ensure that what is deemed necessary is something the taxpayers can understand and support,” he said.

Reuters