The 4th largest goods trading partner with the United States is Japan. In 2016, the trade of goods and services between U.S. and Japan totaled with an estimated $270 billion with exports standing at $108 billion while imports were $163 billion. That very same year, the trade deficit between U.S. and Japan was put at $55 billion. What this means is that a total of $64 billion in goods was exported to Japan from the U.S. in 2016, which is about 1.3% rise from 2015 and 8.2% rise from 2006, with $130 billion goods imported and $70 billion trade deficit between the two countries. On the other hand, for trade services between Japan and U.S., exported services amounted to $45 billion while imported services stood at $31 billion, leaving U.S. services trade surplus with Japan at $14 billion in 2016.
Although China has contributed as much as half of the total trade deficit of America, Japan’s share in this only accounted for 9.4% as at 2016. Also in 2016, Japan was the second-largest exporter of cars to the U.S. after Canada. Cars imported from Japan amounted to $40 billion whereas it was $518 million in exports of American cars. This necessitated the U.S. president, Donald Trump, calling out to Japan to be fair in car trade practices between the two countries as he claims that Japan does things which make it nearly impossible for the U.S. to export cars to Japan. In 2016, Japan’s surplus reached ¥20 trillion ($190 billion), which is 25.8% rise from 2015 and highest in the last nine years. This huge profit from international trade for Japan was attributed to the drop in oil prices and yen’s appreciation, which contributed to lower import prices for Japan. The rise in crude oil imports rose to 33% as average oil price slid 25% to $42 per barrel in 2016. Hence, it is on record that in 2016, U.S trade deficit in both goods and services for the past three years has continued to increase and widened 0.4% to $500. Data from export shrank 2.4% to $2.3 trillion while imports fell 1.8% to $2.7 trillion, both falling for the second consecutive year. These are figures which worry economic analyst and the business community in the U.S.
Another thing that is of concern is the shipping time from Japan to U.SA. To Ship goods from Tokyo’s port or Yokohama to California, that is port-to-port transit time, is eleven (11) days. Actually, it could be much longer than this if you consider the time required for customs clearance on the Japan side including the five (5) days containerization on the side of Japan before a ship departs to the U.S. Other things to put into consideration include ISF (Importers Security Filing) submission which must be made to the U.S. Customs and Border Protection Agency no later than 72 hours before a ship departs from Japan, and one ship consideration required per week. It, therefore, means that assuming there are no challenges with customs clearance and all documents in order, the shipping time from Japan to U.SA. could be about 20 to 28 days. This affects business.
Therefore, as part of plans to address the trade imbalance between U.S and Japan, President Donald Trump has urged Japan to open up its market to America for exports and ensure mutual market access between the two countries. This he said while in talks with Japanese Prime Minister, Shinzo Abe, during the Group of 20 summits in Hamburg, Germany. Also, the U.S. President may have accused Japan of maintaining non-tariff barriers which she has used to protect her automobile market as well as increase in import tariff for foreign agricultural products. The idea of forming a bilateral free trade agreement (FTA) was not on the table for discussion since the U.S. government seems to think that it could lead to stepping up market-opening pressure on Tokyo about the politically sensitive farm and automobile sectors. Since the Trump government has pulled Washington out of the Trans-Pacific Partnership, the U.S regards economic relations with Japan very high and important and has therefore sustained trade discussions with Tokyo.
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