Japan Faces $68 Billion Risk as US Tariff Deal Stalls

- Japan’s Akazawa urges swift action as tariff reduction stalls. - Proposed cuts could save Japan $68 billion, hinge on executive order. On July 31, 2025, Japan’s Economic Minister Akimasa Akazawa warned of delays in a key U.S. tariff reduction that could save Japan up to ¥10 trillion ($68 billion). To avoid a prolonged stalemate, Akazawa urged President Donald Trump to act via executive order, as the U.S. had planned to reduce tariffs on Japanese automobiles from 25% to 15%, with the change originally set for August 1. However, Akazawa expressed concern that drafting a formal written agreement could lead to misinterpretations. During negotiations, Akazawa stressed the measure's economic importance for both nations, arguing that an executive order would likely require fewer concessions from Japan. This position contrasts with that of Prime Minister Shigeru Ishiba and other leaders, who advocate for a formalized deal to strengthen transparency and solidify the agreement's terms. In addition, the broader U.S.-Japan trade deal includes a proposed $500 billion investment framework. According to Akazawa, this program would use loans, investment pools, and loan guarantees to focus on economic security. Direct investments will make up only 1% to 2% of the total amount, while the remainder will generate returns from loan interest. Akazawa also dismissed concerns that the arrangement would disadvantage Japan, projecting that the structured financing would eventually become profitable. Despite detailed plans from both sides, the timing for the tariff changes and the investment framework remains uncertain. Akazawa, however, remains optimistic that the 15% tariff rate will take effect on August 1. This optimism is challenged by a report from The Japan Times on July 28, which stated that the lack of a formal deal could lead to extended negotiations. Meanwhile, U.S. officials are framing the agreement as a model for future bilateral trade relations, highlighting its significance beyond the two countries.