Joshua Kurlantzick, Annabel Richter,
Amidst electoral turmoil in Japan and an upcoming summit between top leaders from the EU and China, President Donald Trump has announced what appears to be the settlement of trade deals with three Asian partners, though there has been little follow-up formalizing some agreements. Months of negotiations seem to have finally paid off this week, helping the United States ahead of a supposed August 1 deadline for new country-specific tariffs to take effect. But despite Trump’s proclamation of his role in securing “the largest trade deal in history” with Tokyo, the needle may not have moved much when it comes to swaying Southeast Asia to make deals that also include their commitments to remove China from their supply chains and transshipments, and ultimately isolate Beijing economically.
On Tuesday, July 22, President Trump shared a post on his Truth Social account declaring that Japan had agreed that exports to the U.S. would face tariffs of 15 percent, a figure which Prime Minister Ishiba Shigeru confirmed to members of the press on Wednesday morning in Tokyo.
Additionally, in a development that shocked most analysts of both countries’ business communities, the agreement stipulates that Japan will create a $550 billion fund that would fall under the discretionary direction of President Trump, with 90 percent of the profits from the fund’s investments returned to the United States. U.S. officials have described its intended use to revitalize specific industrial sectors, including energy infrastructure, pharmaceuticals, and minerals processing, but neither Tokyo nor Washington has issued any comments articulating how it would really work. And with the ruling Japanese LDP losing voters to conservative/nationalist parties, the idea of Japan giving in so much could prove politically untenable in Tokyo.
Meanwhile, Indonesia has apparently signed a deal with the United States—again, formal signing and details agreed by both countries remain sketchy—that creates a tariff rate of 19 percent with commitments to roll back a number of significant non-tariff barriers in a move that defies its traditionally protectionist approach. According to a joint statement released on Tuesday that clarified the terms of the deal initially announced on July 15, Jakarta will essentially eliminate tariffs on American goods despite still facing U.S. tariffs on its exports, invest in $15 billion worth of American energy exports and $4.5 billion of agricultural products, and remove key export restrictions on industrial commodities and critical minerals purchased by the United States.
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