The trade negotiations between the United States and Japan were stagnated on Monday after Japanese negotiators requested assurances that Washington will not put tariffs on Japanese cars and car parts. The request came as officials from both sides have been working tirelessly to make a trade deal that will be signed by U.S. President Donald Trump and Japanese Prime Minister Shinzo Abe during their meeting at the United Nations General Assembly this week.
Though President Trump has threatened repeatedly to impose 25 percent tariffs on Japanese and European cars and car parts, he hasn’t yet made good on these threats. Japanese leaders are concerned that despite Trump’s stalling, such tariffs may be imposed once a trade deal is met.
According to reports by the New York Times and republished by Reuters, Japan demanded that any trade benefits in the new trade deal would be voided if Trump imposes any form of auto tariffs on Japanese cars. No word has been released by the U.S. as to whether they’ll agree to this ‘sunset clause’, though Japanese Foreign Minister Toshimitsu Motegi has expressed optimism that a U.S.-Japanese trade deal will be reached by the end of this month.
In other trade news, U.S.-Sino trade negotiations are set to resume in two weeks, according to U.S. Treasury Secretary Steven Mnuchin, who said that both he and U.S. Trade Representative Robert Lighthizer would meet with Chinese Vice Premier Liu He for the upcoming negotiations. In the meanwhile, International Monetary Fund head Christine Lagarde, who will be taking over as European Central Bank president on November 1, has lambasted the U.S.-Sino trade war, commenting that it is ‘like a dark cloud’ on the global economy. By Lagarde’s estimates, the current trade war will reduce the global economic growth by 0.8 percent in 2020.
The dollar was moderately stronger on Tuesday afternoon in Asia, with the dollar index advancing 0.06 percent to 98.66 .DXY. The greenback gained 0.06 percent against the dollar to 107.61, and it gained against the euro as well, to trade at $1.0989. The euro was shaken by weak German manufacturing data on Monday, as well as data overnight that showed European business activity slowing. The Australian dollar was up 0.10 percent against the dollar, to 0.678.