Japan Resists US Rice Import Pressure, Seeks Auto Tariff Relief Amid $550B Deal Uncertainty

Japan will handle U.S. requests to boost rice purchases within its existing duty-free quota and has no plans to cut farm tariffs, Tokyo's top trade negotiator Ryosei Akazawa said on Tuesday.

The Japanese envoy denied a Nikkei report that Washington wanted tariff cuts on agricultural goods included in a July 22 trade deal or an expansion of U.S. rice imports beyond Japan's overall cap, according to a Bloomberg report. 

“The agreement didn't involve lowering tariffs on agricultural products,” Akazawa said.“I've done absolutely no negotiation that would sacrifice agriculture, and there's no change on that.”

His canceled trip to Washington last week to finalize a $550 billion investment initiative has fueled speculation that friction may delay the implementation of the deal. 

Japan is pressing the U.S. to follow through on its pledge to cut auto tariffs and fold a separate longstanding 2.5% levy into a new 15% rate as discussed in a July deal. No joint document on the deal has been released publicly.

Akazawa stated that there was no gap in the understanding between the two sides and that Japan would determine how to meet U.S. rice demands within its current tariff-free import ceiling. He has not rescheduled his visit.

The White House stated that the deal requires Japan to immediately increase U.S. rice imports by 75%, expanding the quotas. 

Japan imported 346,000 metric tons of American rice last year, out of a total of 770,000 tons of duty-free rice. Lifting the U.S. share to about 600,000 tons would cut imports from suppliers such as Thailand, Australia, and China.

While Tokyo pushes for auto tariff relief, Washington has yet to see Japanese investment funds flow into its manufacturing sector, leaving details of the $550 billion initiative unclear.

On Stocktwits, retail sentiment was bullish on the SPDR S & P 500 ETF Trust (SPY) and the iShares MSCI Japan ETF (EWJ), with low message volume for SPY and high for EWJ.

Meanwhile, sentiment on the Invesco QQQ Trust (QQQ) was bearish amid low volume.

So far this year, SPY is up 10.7%, QQQ has gained 11.9%, while EWJ has outperformed with a 17.6% rise.

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