Japan braces for dialogue with U.S. after Trump clout overpowers G-20

Japanese Finance Minister Taro Aso, left, and U.S. Treasury Secretary Steven Mnuchin meet for talks ahead of the G-20 Finance Ministers meeting in Baden-Baden, southern Germany. Franziska Kraufmann/dpa via AP

BADEN-BADEN, Germany —

Group of 20 financial chiefs apparently succumbed to the clout of the new U.S. administration of President Donald Trump and dropped their long-held pledge to resist protectionism in their communique released after their two-day gathering through Saturday.

Sources from the G-20 countries downplayed the significance of the disappearance of the phrase resisting “all forms of protectionism,” but some observers say the relevance of the group designed to promote international economic cooperation will still be tested.

As Japan is scheduled to start a bilateral economic dialogue with the United States in April, the country will likely require a delicate balancing act between pursuing its own interests and taking heed of its long-time ally.

“The omission of the part about protectionism clearly reflected the stance of the United States,” said Yuji Kameoka, chief foreign exchange analyst at Daiwa Securities Co.

Kameoka said the United States is unlikely to walk away from free trade but it is gradually tilting toward protectionism to correct its trade imbalances.

“When it comes to bilateral talks, the focus is on how much Japan can resist external pressure from the United States,” he added.

Trump and Japanese Prime Minister Shinzo Abe agreed to launch the economic dialogue, a framework under which Tokyo and Washington will discuss topics ranging from the economy, trade and energy.

At the G-20 gathering in the German resort of Baden-Baden, Japanese Finance Minister Taro Aso told his peers that free trade has contributed to economic growth over the years. Aso, who will represent Japan at the economic dialogue with the United States, said there were no objections to his view.

A growing protectionist sentiment is seen by economists as a bad omen for economic growth. Trump has pulled the United States out of a Trans-Pacific partnership deal that his predecessor Barack Obama had pushed as part of his Asia pivot policy, and that Abe had hoped would strengthen Japan’s deflation-haunted economy.

Much remains to be seen over how much of what Trump has promised to do, including increased infrastructure spending and tax cuts, will be implemented and translate into economic growth even as some post-election euphoria remains in financial markets.

In the latest communique, the G-20 acknowledged that there are downside risks to the global economy and vowed to use all policy tools—monetary, fiscal and structural—to ensure sustainable and balanced growth.

“We believe in free trade,” U.S. Treasury Secretary Steven Mnuchin told reporters after the G-20 meeting. But he stressed the importance of “balanced” trade and that the United States wants to “reexamine” some trade deals.

Following their first one-on-one talks, Aso described Mnuchin as someone he finds “easy to work with,” noting that the former Wall Street banker is well-versed in monetary and financial matters.

The financial chiefs of advanced and emerging economies agreed that existing international agreements on currencies, including a pledge to refrain from competitive devaluations, should be respected. The G-20 finance chiefs also endorsed all of them in their post-meeting communique.

Trump, who has taken issue with U.S. trade deficits with China and Japan, has accused Tokyo of devaluing the yen through its monetary easing, a view dismissed by Aso and other Japanese officials.

Hideo Kumano, chief economist at the Dai-ichi Life Research Institute, said the G-20 agreement to “refrain from competitive devaluations” would make it difficult for the United States to step up criticism of Japan.

“What is important is to negotiate and take action under multilateral rather than bilateral frameworks,” Kumano said. “The G-20 needs to play a role in enabling international coordination.”

For now, the outcome of the G-20 and the Aso-Mnuchin meeting came as what one senior government official described as a relief to Japan.

But Japan may face real challenges when it grapples with the United States in the economic dialogue.

“As seen in the communique, we can see the United States shifting its weight from where it used to be under Trump, who is putting ‘America First.’ It could be China, Germany or Japan that it will demand to change,” Kumano said.

© KYODO

  • -2

    CruisinJapan

    “What is important is to negotiate and take action under multilateral rather than bilateral frameworks,” Kumano said.

    While Trump is president, he has made it clear that is NOT going to happen. Sorry Kumano-san, but the G-20 won't prevent the decline of multilateral free trade. This article just goes to show that no one really agrees with each other on the world stage right now.

    The omission of the part about protectionism clearly reflected the stance of the United States,” said Yuji Kameoka, chief foreign exchange analyst at Daiwa Securities Co.

    Yes, obviously. But who is Japan to really talk about "protectionism". Although the public really saw limited information about the negotiations of the TPP, Japan and its protectionist approach to agricultural and manufacturing imports clearly wasn't helping to move the ball forward.

    Now you have more protectionism than there has been in a long time, and constant finger pointing over currency manipulation.

    A majority of the world news has been focused on devaluing currency to boost exports, printing money to try to stimulate smaller than expected growth (especially in Japan), and now a bunch of countries closing themselves off and putting up more barriers to free trade (especially the US)

    My question is, how much inflation will we see in the US if Trump's tariffs kick in. Prices are sure to rise on things that the US has traditionally imported to say the least. That will probably echo throughout the rest of the G-20.

  • -2

    tinawatanabe

    Japan and its protectionist approach to agricultural and manufacturing imports clearly wasn't helping to move the ball forward.

    What manufacturing imports are you talking about? No tariffs on imported cars.

  • 2

    CruisinJapan

    @tinawatanabe

    You make a good point. I will take a small step back when I talked about Japan's protectionism, at least in the automotive sector. I can uphold what you said based on what I read in this Bloomberg article. To be honest, I was a little surprised that there are no tariffs on American cars.

    https://www.bloomberg.com/politics/articles/2017-01-24/abe-has-a-trump-problem-how-to-get-japan-to-buy-more-u-s-cars

    In other words, it is the Japanese people that choose not to buy American cars.

  • 3

    1glenn

    American manufacturers made the decision to abandon the production of small cars withing American borders, and to emphasize the manufacture of large vehicles. Outside the USA, few people are interested in buying large vehicles. Gas guzzlers are popular in America, not so much elsewhere. So, we can't export what we don't make.

    An exception would be Buick. Buick sold about a million vehicles in China last year, while selling only about 1/4th that number in America. Whatever The Chump does will likely mess up the ability to employ Americans who work on Buick exports to China. For historical reasons having to do with the last Chinese emperor, today's Chinese have a fondness for Buicks. Buick makes good vehicles, but most of them guzzle gas.

  • 1

    AlexBec

    CruisinJapan, I've lived in America and I've seen the kind of cars people drive around here. No one in Japan would buy your large SUV's or pickup trucks! Make cars that Japanese want to buy! Put on ads on TV just like Toyota and Honda does in America! Their is no tariffs on American cars! they just suck as a product! overpriced, quality not as good as a Japanese cars, and their massive in size! Consuming an even larger amount of oil!

  • 0

    dcog9065

    It's extremely unfortunate the G20 of all organisations omitted resisting protectionism, every country in this group grew rich off free trade

Login to leave a comment

OR

グローバルに
活躍したいあなたへ
外資系転職

バイリンガル人材の
ための求人サイト

見てみる

More in Politics

View all

View all

Japan Investment
Properties

Listings Updated Daily

Search