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U.S. keeps metal tariff exemption as bargaining chip; Japan opts for orthodox negotiations

As of April 23, one month will have passed since the U.S. imposed steep tariffs on steel and aluminum products to curb imports. At his meeting with U.S. Secretary of the Treasury Steven Mnuchin in Washington on April 20, Finance Minister Taro Aso again asked that Japan be exempted from these import restrictions, but the U.S. side merely said that this issue will continue to be studied. It is keeping the exemption card as a bargaining chip in the new “Japan-U.S. consultations for free, fair and reciprocal trade” due to start shortly. Japan will not agree to any “deal” and will continue to assert that [Japanese products] do not affect U.S. national security, seeking exemption through orthodox negotiations.

 

However, Japan is also wary that if it makes strong demands for exemption, “it may be forced to make concessions on auto, beef, and other products,” according to a senior Ministry of Economy, Trade, and Industry (METI) official. Since Japanese exports are high-quality products that are difficult to replace, there has not been a sharp decline in exports to the U.S. so far. Therefore, Japan is poised to “persevere in persuading the U.S. to grant exemption,” (in the words of METI Minister Hiroshige Seko) and deal with this situation calmly.

 

Nevertheless, if products failing to enter the U.S. divert to markets in other countries, this may result in chaos, such as a plunge in prices.

 

According to a market source, market prices of hot-rolled steel sheets, a typical Chinese steel product, in mid-April went down by about 5% from early March. The deterioration of conditions in the steel market may also affect Japanese manufacturers. (Slightly abridged)

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