Barack Obama and his negotiators had to leave Japan empty-handed yesterday after failing to strike a trade deal with Tokyo thought to be key to Washington's Asian "pivot".
As the US president continues his Asia tour today in South Korea and Malaysia, analysts said his first stop was "a failure" in terms of the White House agenda.
But his Japanese counterpart, Shinzo Abe, was celebrating a success by winning America's security backing.
US officials tried to put a positive spin on the trade talks, by claiming a "breakthrough".
A senior US official said: "There are still details to be worked out … much work to be done ... [but] we believe we do have a breakthrough in our bilateral negotiations."
In a joint statement released yesterday, the US and Japan said they were committed to taking "bold steps" to reach a deal that would inject momentum into a delayed 12-nation Trans-Pacific Partnership (TPP) trade pact.
But Japanese officials were more cautious, saying the two sides had agreed to keep talking.
"The two countries understand that each has sensitive issues and we took these into consideration, agreeing to accelerate efforts to reach an agreement," said government spokesman Yoshihide Suga. The trade deal was widely seen as a crucial step to concluding the wider TPP.
Obama and Abe ordered their top aides to make a final push to reach agreement after the leaders met on Thursday, but Economy Minister Akira Amari said yesterday that "gaps" still remained, despite recent progress.
"We can't say there's a basic agreement," Amari said after a second day of almost round-the-clock talks failed to settle differences over farm products and cars. "Overall, the gaps are steadily narrowing," he added.
The TPP has been described as the centrepiece of the US rebalancing towards Asia that will add economic flesh to the otherwise security-focused strategy.
However, Japan won backing from the US over its territorial dispute with China. Obama assured Japan on Thursday that Washington was committed to its defence, including the defence of the Diaoyu Islands at the heart of a long-term row with Beijing.
Yesterday's joint statement echoed those comments and put in writing a long-held US stance that the islands, known in Japan as the Senkakus, are covered by a security treaty that obliges Washington to protect Japan.
Those comments drew a swift rebuke from Beijing, with Foreign Ministry spokesman Qin Gang expressing "serious concerns" about some of the contents of the joint statement.
Jeff Kingston, director of Asian Studies at Temple University's Tokyo campus, said that while the impasse in trade talks did not come as a surprise, Obama's rebalancing strategy had suffered a major setback.
"Overall, the summit for Japan was a success in terms of what Prime Minister Abe wanted to achieve - American security backing. In terms of the US agenda, it was a failure," he said.
Agence France-Presse, Bloomberg