Trump’s Japan Agenda Shows the Pitfalls of His Trade Strategy



Gary Clyde Hufbauer, Zhiyao (Lucy) Lu | Peterson Institute for International Economics

President Trump’s insistence on negotiating one-on-one trade deals, rather than plurilateral or multilateral agreements with many countries, has produced a proposed new accord with Japan. Trump maintains that the United States enjoys superior negotiating leverage in bilateral talks. But if anything, the new US agenda for Japan shows the pitfalls of that approach. It demands many concessions from Japan that Prime Minister Shinzo Abe is likely to reject.

In a plurilateral setting, such as the erstwhile Trans-Pacific Partnership (TPP), which Trump walked away from, US concessions from Japan might have been offset by, for example, Canadian or Mexican concessions to Japan. In a bilateral deal, three-way compensation is not possible. It is also worth underscoring that the word “Free” is conspicuously omitted from both the United States-Mexico-Canada Agreement (USMCA) negotiated last year, as well as the negotiating objectives for the proposed US-Japan Trade Agreement, which Ambassador Robert Lighthizer delivered to Congress in December. This is no accident. Trump’s goals are closer to “one-way free trade,” with elements of “managed trade,” rather than “bilateral free trade.”

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