Zürcher Nachrichten - US-EU tariff talks progress as Trump announces Japan deal

In an attempt to slash his country's trade deficits, Trump has vowed to hit dozens of countries with punitive tariff hikes if they do not hammer out a pact with Washington by August 1.

While the Trump administration earlier promised "90 deals in 90 days" as it delayed the imposition of higher duties in April, Washington has so far unveiled just five agreements including with Japan and the Philippines.

The others are with Britain, Vietnam and Indonesia, the latter of which the White House noted would ease critical mineral export restrictions.

Negotiations remain ongoing with major US trading partners China, Canada, Mexico and the European Union.

Washington and Brussels signaled negotiations were moving along, with German Chancellor Friedrich Merz voicing optimism that "decisions" may be coming soon.

Several EU diplomats added that the bloc was examining a US proposal involving a 15 percent tariff -- and sectoral carve-outs still to be decided.

EU trade chief Maros Sefcovic was expected to speak with US Commerce Secretary Howard Lutnick on Wednesday.

US Treasury Secretary Scott Bessent, meanwhile, told Bloomberg Television: "I think that we are making good progress with the EU."

Separately, representatives from China and the United States will meet next week in Swedish capital Stockholm to further negotiations before an August 12 deadline agreed in May.

Beijing and Washington imposed tit-for-tat levies on each other's exports this year, reaching triple-digit levels, before agreeing to lower these temporarily until mid-August.

As the clock ticks down, China said Wednesday it would seek to "strengthen cooperation" with Washington, and confirmed vice premier He Lifeng would attend the talks.

- 'Massive deal' -

For now, Trump was touting Washington's agreement with Japan as "a massive deal."

He said on his Truth Social platform Tuesday that under the deal, "Japan will invest, at my direction, $550 Billion Dollars into the United States, which will receive 90% of the Profits."

Bessent told Bloomberg Television that Japan received a 15 percent tariff rate, down from the 25 percent threatened, as "they were willing to provide this innovative financing mechanism."

"They are going to provide equity credit guarantees and funding for major projects in the US," Bessent said.

Japanese exports to the United States were already subject to a 10 percent tariff, and this would have spiked to 25 percent come August 1 without a deal.

Duties of 25 percent on Japanese autos -- an industry accounting for eight percent of Japanese jobs -- were also already in place, plus 50 percent on steel and aluminum.

Japanese Prime Minister Shigeru Ishiba said the autos levy had now been cut to 15 percent, sending Japanese car stocks soaring, with Toyota and Mitsubishi up around 14 percent each. The Nikkei rose 3.5 percent.

"We are the first (country) in the world to reduce tariffs on automobiles and auto parts, with no limits on volume," he told reporters.

Japan's trade envoy Ryosei Akazawa, who secured the deal on his eighth visit to Washington, said the 50 percent tariffs on steel and aluminum would remain.

Akazawa also said increased defense spending by Japan -- something Trump has pressed for -- was not part of the agreement.

Trump added Tuesday that Japan agreed as well to "open their Country to Trade including Cars and Trucks, Rice and certain other Agricultural Products, and other things."

Rice imports are a sensitive issue in Japan, and Ishiba's government -- which lost its upper house majority in elections on Sunday -- had previously ruled out any concessions.

Japan currently imports 770,000 tons of rice tariff-free under its World Trade Organization commitments, and Ishiba said it would import more US grain within this.

Ishiba said Wednesday that the deal does not "sacrifice" Japan's agricultural sector.

Tatsuo Yasunaga, the chair of the Japan Foreign Trade Council, welcomed the trade deal but said the business community needed to see details to assess its impact.

Other US trading partners are watching closely as the August 1 deadline approaches.

The Philippines' deal announced Tuesday only saw levies cut by one percentage point, to 19 percent, after Trump hosted President Ferdinand Marcos.

China on Wednesday said it supported "equal dialogue" following the announcement of the Japan-US deal.

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W.Vogt--NZN