Donald Trump’s trade wars: is Japan the next ally in the US president’s sights?

While the US takes aim at China, Canada and Mexico over perceived trade imbalances, Japan has kept a low profile, hoping Prime Minister Shinzo Abe’s friendship with golf buddy Donald Trump will keep Tokyo out of the firing line.

But as Abe and Trump prepare to hold talks that will touch on trade frictions, there are signs Japan could be next in the US president’s sights, with the country’s greatest fear being higher tariffs on cars.

What’s Trump’s beef with Japan?

Trump has frequently grumbled about a “very high deficit” with Japan, the world’s third-biggest economy. In comments to The Wall Street Journal, he stressed his good relations with the Japanese, before adding menacingly: “Of course, that will end as soon as I tell them how much they have to pay.”

Last year’s deficit in goods traded with Japan was US$68.8 billion, third behind China (US$375 billion) and Mexico (US$71 billion), and less than one-tenth of the total US deficit with the rest of the world (US$796 billion). The deficit amounted to US$40 billion in the first eight months of this year, according to official US statistics.

Vehicle and parts exports from the auto sector account for 80 per cent of the imbalance and it is the sight of “millions of Japanese cars” on American roads that raises Trump’s hackles, while few US brands are driven in Japan. That has little to do with tariffs – Japan has no duties on imported cars, unlike the United States which imposes a 2.5 per cent levy.

Analysts say with their larger sizes, US vehicles are not well suited to Japan’s roads or the tastes of its consumers. Critics argue, however, that Japan imposes a raft of non-tariff barriers – including what they say are overly rigorous safety standards – that make importing difficult.