The President of the United States, Donald Trump on September 25 said that after a year of negotiations, Washington and Tokyo have finally taken a major step towards finalizing a new comprehensive trade deal. Both the leaders of global economic powers at next to each other and Donald Trump said they formally announced the “first stage” of a phenomenal new trade agreement. The US President also said that it is big, and in the future the leaders are going to have a lot more. The Prime Minister of Japan, Shinzo Abe and President Trump met on the sidelines of the United Nations General Assembly in New York. PM Abe said that this new deal will be a beneficial solution for both nations.
Under the deal, Japan will reduce tariffs for $7 billion dollars in the American farm exports such as beef and pork along with the mark-ups on purchases of wheat and barley from the nation. In return, President Trump has agreed to cut taxes on $40 million agricultural goods from Japan. Washinton will also give a breather on the tariff rate quotas on Japan's beef which will further allow the country to compete to acquire a greater share in the American market. However, this recent announcement by the leaders did not resolve the complicated issues of the US threatening to impose steep tariffs on Japan's auto imports. Moreover, reportedly in a separate agreement, the officials have also agreed on a separate agreement to eliminate duties on digital products. This will further ensure barrier-free data transfers across the borders.
Reportedly, later in a news conference, Shinzo Abe said that both leaders have agreed to not impose the auto tariffs claiming that the year-long understanding between the nations is still in force. He further said that no further tariffs have been “firmly” confirmed. President Trump had threatened Japan of tariffs in order to strike a comprehensive deal. The main reason for the agreement is to evidently scale back the trade deficit in the US with Japan. This will benefit the American farmers which also form the major chunk for political support. The US President also claimed that this agreement was essential to decrease the chronic trade deficit. The total trade deficit between both nations was $58 billion. According to a data by the government, Japan had exported cars worth $51 billion in the market.
(with PTI inputs)