Is the US-Japan Summit Successful?… “US Steel and Tariff Issues Remain

Key Challenges Persist After the Historic US-Japan Summit, with US Steel Acquisition and Tariffs Still in the Spotlight

The US-Japan summit held on February 7, 2025, has been described as a successful diplomatic encounter, with Japanese Prime Minister Shigeru Ishiba managing to win over US President Donald Trump. However, there are still significant concerns about economic issues that remain unresolved, particularly regarding the acquisition of US Steel by Japan’s Nippon Steel and the looming trade tariffs.

The Nihon Keizai Shimbun (Nikkei) has reported that while many view the summit as successful, there is skepticism surrounding the surface-level optimism. The article suggests that the term "successful" may reflect the low expectations set prior to the meeting, especially considering the diplomatic uncertainty surrounding Prime Minister Ishiba’s ability to navigate delicate negotiations with President Trump. Before the meeting, many analysts were comparing Ishiba’s foreign diplomacy with that of former Prime Minister Shinzo Abe, highlighting concerns about Japan’s ability to secure firm commitments from the unpredictable Trump administration. Given the context of these low expectations, maintaining the status quo and securing some assurances on Japan’s security were seen as major wins.

Challenges in US-Japan Economic Relations: US Steel and Tariff Concerns

Despite the positive tone set by the leaders during their meeting, key economic uncertainties remain. One of the central issues was the proposed acquisition of US Steel by Japan’s Nippon Steel. President Trump’s comments on the deal, referring to it not as a "purchase" but as an "investment," have sparked confusion. This statement contrasts with previous rhetoric in which Trump opposed the acquisition outright. Some analysts interpret this change as a positive shift that could open the door to a more balanced deal, where both parties benefit. However, for Nippon Steel, which initially aimed to acquire the full shares of US Steel, this shift in the deal’s nature necessitates significant adjustments.

Masahisa Ikeda, head of A&O Sherman’s Japan office, pointed out that if Nippon Steel’s stake exceeds 50%, US Steel could become a subsidiary of Nippon Steel, making Trump’s assertion of no "purchase" difficult to sustain. Prime Minister Ishiba also acknowledged in an interview with NHK that the deal is not a simple acquisition but rather an investment, signaling a likely revision of the initial plan.

On February 7, Nippon Steel made a new offer to President Trump, reportedly including a higher investment amount than previously proposed. While details remain unclear, this offer is believed to reflect an attempt to address concerns raised by both parties. The initial acquisition proposal was valued at $14.1 billion, with an additional $2.7 billion for new facilities. Trump has also agreed to meet with Nippon Steel’s executives to discuss further.

The Looming Threat of Tariffs: Will Japan Face New Trade Barriers?

Another key issue discussed during the summit was the possibility of new tariffs. President Trump indicated that he would soon announce reciprocal tariffs, which could affect Japan as well. These tariffs would mirror the ones Japan imposes on US products, particularly in the agricultural sector. Prime Minister Ishiba, in his NHK interview, noted that while there was no specific mention of automobile tariffs, Japan’s agricultural products are likely to face higher duties in the near future. Currently, the US imposes a 2.5% tariff on Japanese passenger cars, while Japan does not apply any tariffs on American vehicles. However, non-tariff barriers, such as environmental and safety regulations, continue to restrict the entry of US cars into the Japanese market. According to data from the Japan Automobile Manufacturers Association (JAMA) and the Japan Automobile Importers Association (JAIA), foreign vehicles accounted for just 7.6% of the Japanese car market in 2023.

As part of the broader trade dialogue, Japan pledged to work toward reducing the $100 billion US trade deficit with Japan, a commitment seen as a response to Trump’s repeated demands for Japan to address this imbalance. Although President Trump expressed optimism that energy exports, such as oil and gas, could help resolve the deficit, the long-term effectiveness of this approach remains to be seen.

Future Prospects and Ongoing Diplomatic Tensions

The economic aspects of the US-Japan relationship, including the fate of the US Steel acquisition and the possibility of new tariffs, remain a source of uncertainty. Wataru Yamaguchi, a political science professor at Tokyo’s Teikyo University, cautioned that the promises made during this summit—such as Japan’s $1 trillion investment in the US and the reduction of the trade deficit—will need to be continually verified in future meetings. The success of the summit may ultimately hinge on how well these promises are translated into concrete actions and whether the economic issues that remain unresolved today can be addressed in the near future.

As both nations continue to navigate these complex economic and diplomatic challenges, the long-term impact of this summit will depend on the ability of US and Japanese leaders to find common ground on these critical issues. The world will be watching to see whether the "golden era" of US-Japan relations proves to be more than just surface-level shine.