In a deal to win back some benefits that United States farmers lost when US President Donald Trump pulled out of a broader Asia-Pacific pact his first week in office, the US and Japan signed a limited trade agreement on Monday.
Items cultivated by farmers in the US have been at a disadvantage in Japan since Trump withdrew from the Trans-Pacific Partnership Agreement, which had been negotiated by the administration of his predecessor, former US President Barack Obama.
The other 11 countries that signed the agreement – including big farm producers such as New Zealand and Canada – went ahead without the US and were already enjoying preferential treatment in Japan.
“This is a huge victory for America’s farmers, ranchers and growers,” Trump said in a signing ceremony at the White House. “And that’s very important to me.”
But Tami Overby, senior director on Asia and trade issues at the McLarty Associates consultancy, said competitors of the US in agriculture got a two-year head start and used it to sign multiyear contracts in Japan to sell farm products.
“We’re going to have to thrash back and fight for lost market share,” she said.
The deal comes at a time when other parts of the Trump administration’s trade agenda have largely stalled. The US has been locked in a costly trade war with China for more than a year, though negotiators are scheduled to resume talks in Washington on Thursday.
And Congress has yet to approve a North American trade deal that Trump’s trade team negotiated last year with Canada and Mexico.
While rewarding US farmers, the new US-Japan deal does not resolve differences over trade in automobiles. Trump has said the two countries will continue to work on a more comprehensive agreement on that front.
Trump has threatened to impose import taxes on foreign cars, claiming they pose a threat to US national security given the ramifications for artificial intelligence and self-driving vehicles.
At the UN General Assembly, Japanese Prime Minister Shinzo Abe told reporters that Trump had assured him a previous agreement to spare Japan from new car tariffs still stood.
But Japanese automakers were disappointed that the US kept existing auto tariffs at 2.5 percent.
The limited trade pact also includes market-opening commitments on $40bn worth of digital trade between the US and Japan.
The deal, Overby said, “is important, but it’s still not the whole enchilada”. US business groups are holding out for a broader deal that would give US companies more access to Japan in businesses such as insurance and pharmaceuticals.
Trump has long complained about the large trade deficit with Japan, which came to $58bn last year. Japan is the world’s third-biggest economy, behind the US and China.