Japan seeks full removal of US tariffs ahead of trade talks

By Leika Kihara and Makiko Yamazaki

TOKYO (Reuters) -Japan will seek full removal of additional tariffs imposed by U.S. President Donald Trump, its top negotiator Ryosei Akazawa said on Tuesday, ahead of his scheduled three-day visit to Washington.

Japan, a long-time U.S. ally, has been hit with 24% levies on its exports to the United States although these tariffs have, like most of Trump's sweeping "reciprocal" tariffs, been paused for 90 days.

But a 10% universal rate remains in place as does a 25% duty for cars, which is set to be particularly painful. The U.S. is Japan's biggest export destination and automobile shipments account for roughly 28% of its exports there.

"The tariffs already in place are eating away Japanese firms' profits day by day," Akazawa told a news conference.

"It won't be easy but the government will work as one to achieve our goal at the earliest date possible," he said. "Our goal is the complete removal of additional U.S. tariffs."

Akazawa, who is Japan's economy minister, said he will visit the U.S. from Wednesday to Friday for talks with U.S. Treasury Secretary Scott Bessent and U.S. Trade Representative Jamieson Greer.

Japan hopes to convince the U.S. that the two countries can achieve a "win-win" situation without resorting to tariffs, such as by expanding Japanese investment in the U.S., Akazawa said. He did not comment on a possible timeframe for striking a deal.

Given its heavy reliance on the U.S. market, Japan has much at stake in the talks that are expected to cover tariffs, non-tariff barriers and the thorny topic of exchange rates.

Most economists expect Trump's tariffs to knock 0.6 percentage point off Japan's economic growth in the current fiscal year ending in March 2026, according to a survey by the Japan Center for Economic Research released last week.

The market rout caused by Trump's tariffs also risks cooling business sentiment and derailing a cycle of rising wages and prices, which the Bank of Japan (BOJ) sees as a prerequisite in normalising ultra-easy policy.

Global stock, currency and bond markets have whipsawed due to Trump's back-and-forth comments on tariffs, with some analysts seeing the recent sharp drops in U.S. Treasuries and the dollar as a sign markets are losing confidence in the safe- haven status of U.S. assets.

A senior BOJ official played down the chance global markets are spiralling into a dangerous "dash for cash" situation.

"Unlike during the global financial crisis, we're not seeing a major decline in short-term liquidity," Akio Okuno, head of the BOJ's monetary affairs department, said on Tuesday.

But uncertainty over the fallout from Trump's policy will likely keep the BOJ from raising interest rates for some time, including at its next policy meeting on April 30-May 1, analysts say.

CURRENCY ISSUES

The yen's recent rebound, driven mostly by the dollar's broad-based declines, may also ease potential pressure from the U.S. to prop up the yen against the dollar to give U.S. exports a competitive advantage, some analysts say.

Tokyo has lobbied to keep the thorny issue of currency rates separate from direct negotiations on trade, and up to the two countries' finance chiefs to discuss.

Finance Minister Katsunobu Kato said he is arranging to travel to Washington next week to attend the spring International Monetary Fund and World Bank meetings, where he could hold meetings with Bessent.

Japan and the U.S. share the view that markets should set exchange rates, and that excessive and disorderly currency moves have adverse effects on the economy and financial stability, Kato told parliament on Tuesday.

"I hope to continue dialogue with the U.S. based on this shared understanding," he said.

(Reporting by Mariko Katsumura; Editing by Himani Sarkar and Shri Navaratnam)