US deal a structural challenge for Japan

US President Donald Trump announced the conclusion of a trade agreement between the United States and Japan on July 22, which signaled a temporary easing of trade frictions between the two sides. Under the deal, the additional 25 percent tariff imposed on Japan's core products — automobiles and auto parts — since April will be halved, reducing the total tariff to 15 percent.

Japan is one of the major economies with a trade surplus with the US to be subjected to 15 percent tariffs, which appears to be a concession from Washington. But the fact is, Japan "exchanged" $550 billion worth of investment, market access and profit transfer to get the tariffs reduced from 25 percent to 15 percent, a cost far greater than the apparent benefit. Strategically speaking, Japan's economy is set to feel the long-term impact of the US shock.

However, the $550 billion investment, market access and profit transfer in exchange for the 15 percent tariff agreement is not the end of the US administration's "transactional diplomacy".

The trade deal may increase the structural asymmetry in the US-Japan alliance. In international relations, the term "alliance" is often associated with shared security, aligned values and strategic coordination. But amid escalating global trade tensions and conflicting national interests, even the supposedly "unbreakable" US-Japan alliance is struggling to maintain economic harmony.

The US leader began his second term by imposing a series of "reciprocal tariffs" on imports from the US' major trading partners, underscoring a critical reality: even allies can't escape the US' interest-driven geopolitical competition and the "America first" strategy.

For the US administration, "America first" is not just a political slogan but a substantive foreign economic strategy. Its core objective is to rewrite global trade rules through bilateral negotiations that prioritize industrial security, boost exports and reduce trade deficits of the US.

Despite their strong and stable military alliance, economic relations between the US and Japan are marked by inequality and intense competition. Washington has long been wary of Tokyo's trade surplus, while the latter, heavily dependent on the US market, continuously tries to strike a "strategic passive balance" between its interests and US demands.

According to the July 22 trade deal, Japan will invest $550 billion in the US, with the US pocketing 90 percent of the profits the investment generates, and further open up its market to American automobiles, trucks, rice and other products. In return, Washington will impose 15 percent tariffs on Japanese imports — an additional 12.5 percent tariffs on Japanese cars, down from 25 percent — on top of the existing 2.5 percent base rate. This is a major concession by Japan, not the other way around, in order to protect its auto industry.

The auto sector is a key area of US-Japan competition. Washington has long criticized Tokyo for maintaining market barriers against American vehicles. Although Japan denies building any overt tariff barriers, the US claims there exist "technical trade barriers", including emission standards, driving habits, and a closed sales network, all of which "hinder the US' full access" to the Japanese market. What appears to be a technical issue is, in fact, a reflection of the US' structural anxiety over its weakening industrial competitiveness.

The US' weakening competitiveness is especially reflected in the US administration's decision to impose tariffs on Japanese steel and aluminum. Like the European Union and the Republic of Korea, Japan is also a long-standing US ally. Yet on the pretext of safeguarding "national security", the US has been pressuring Japan to agree to its unfair trade terms. This shows the US' growing tendency to label economic issues as security concerns, and suggests there is no institutional exemption even for US allies when it comes to tariffs.

The US-Japan tariff dispute may appear to be about sectoral or product-specific disagreements, but below the surface, it's about a broader structural recalibration of the alliance. Washington has been undermining the traditional "security for market access" norm to safeguard its narrow interests, in the case of not only Japan but also its other allies — the EU, the ROK and Canada.

The tariff friction between the US and Japan is more than a trade dispute, for it symbolizes a change in the global power structure and the nature of alliances. As economic nationalism, strategic competition, and prioritization of national interests dominate foreign policy, even long-standing alliances are prone to breaking up due to unbalanced benefit-sharing.

Japan's restrained and conciliatory response has helped it to mitigate short-term risks, but it has also exposed its vulnerability in the ongoing reconfiguration of global trade rules. For US-Japan relations, the core challenge is not only the wrangling over tariffs. It is also the redefining of the meaning of "alliance", and the search for a new equilibrium between strategic security and economic cooperation. This is a challenge for not only Japan but also for all US allies navigating the realities of a new geopolitical order.

The author is deputy director of the Institute of American and European Studies at the China Center for International Economic Exchanges. The views don't necessarily reflect those of China Daily.

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