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US-Japan Trade Deal May Be Delayed Due to Car Tariffs

WASHINGTON – The United States and Japan may fail to sign a trade deal this week as negotiators on both sides struggle to resolve President Trump's threat to set tariffs on Japanese cars.

Both countries have been working to sign a limited trade deal this week as Mr Trump and Japanese Prime Minister Shinzo Abe prepare to appear side by side at the UN General Assembly meeting in New York. Instead, the two sides can issue a joint statement and continue to work to finalize an agreement in the coming weeks, said several people familiar with the negotiations.

A key turning point is Mr. Trump's threat to impose a tax on cars imported into the United States from Japan. The levies would be similar to those he has already placed on steel and aluminum imported from Japan, Europe and other countries. Mr Trump has long considered his threat of tax cars, which account for more than one-third of the goods Japan shipped to the United States last year, as a source of leverage that brought Japan to the negotiating table.

But this threat – and Mr Trump's negotiating strategy – has also become a barrier to resolving the deal, according to people familiar with the discussions. Japan seeks a firm commitment from the administration not to tax Japanese cars and insists on including a "sunset clause" in the pact that would lead to the deal – and all the benefits it would give American farmers – if Mr Trump follow these threats to his car tax, these people said.

The Trump administration has opposed such a provision.

Both parties also carry out a "legal review" of their agreement to ensure that the agreed provisions have no undesirable effects.

The deadlock raises questions about whether the United States and Japan will be able to close the deal in the coming weeks, in time for the Japanese legislature to review the agreement when it convenes next month. The potential deal with Japan will remove some obstacles to US exports of beef, pork and wheat, helping to boost political support for Mr Trump among American farmers who have been severely injured by his trade war with China. In return, the United States will lower its barriers to Japanese machinery and chemicals, and the two countries will sign new standards for e-commerce and other digital commerce.

Following a meeting with Mr Abe at a summit of global leaders in France in August, Mr Trump said that the United States and Japan had reached an agreement "in principle". Last week, his administration sent notice to Congress that it intended to reach an agreement in the coming weeks. [19659002] Unlike the traditional trade pact, which covers almost all sectors of the economy, the deal with Japan will be limited to a few sectors and products. But that would be an important political conversation for the president, who is struggling to make progress in trade talks with China and has not persuaded congressional Democrats to accept a revised North American trade deal.

It could also help motivate US farmers and ranchers who complain about Mr Trump's decision to withdraw the US from the Trans-Pacific Partnership, a multilateral trade deal involving Japan. Mr Trump said he could provide better trading conditions for US farmers through bilateral negotiations.

While Japan initially opposed Mr Trump's demands for individual negotiation of a trade deal, the threat of auto-tariffs led Japan to negotiate a negotiated negotiating table.

The Trump administration determined this year that car imports pose a threat to America's national security, eroding an industrial base that also supplies the United States military. The decision cleared the way for the president to impose tariffs on foreign cars and auto parts, as he did on imports of steel and aluminum, including from Japan.

But in May, the administration said it would delay that decision for another six months until it continued to negotiate trade agreements with both Japan and the European Union, two major US car importers. One of Japan's top priorities in the negotiations is to ensure that its cars will not be affected by such a tax.

Daniel S. Snyder, a professor of East Asian Studies at Stanford University, stated that introducing a trade clause would have withdrawn Japan's concession to agriculture if Mr Trump had given up his word "is a very smart decision to make." Mr Snyder added that the problem was that "Trump cannot be trusted, but they cannot say it publicly. "

Masato Otaka, the secretary of the Japanese Ministry of Foreign Affairs, said the two countries are still working to reach an agreement.

" This is an important issue for us and the United States, "he said on Monday while New York for the UN General Assembly. "I think the goal was set to sign the agreement before the end of September. Honestly, we still have some time. All my colleagues in the government are working hard to actually achieve this."

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