QCI #033 - Japan and the US Make the Deal
Let's Talk Economics!
After increasing tariffs on its own allies, including Japan, Japan considered joining the only Trade Bloc that threatens the world's largest economy, BRICS, which includes half of the world's Oil market and roughly modern economies.
This keeps Japan protecting US trade routes in the Pacific, which comes at a high cost.
Imposing higher tariffs and then lowering them is an old negotiation tactic that has a high probability of success, especially if you are the larger economy and one of the main consumers of the exports of the economy with which you are negotiating.
The US agreed to lower tariffs on many Japanese goods from 25% to a 15% baseline rate, which is a significant concession, and the reason for this is Japan's commitment to invest $550 Billion in key US Industries, such as semiconductors, pharmaceuticals, energy, and artificial intelligence.
Japan also agreed to increase market access for imports of US goods, including rice and corn, and to lift its long-standing barriers that made it difficult for US automobiles and other industrial goods to compete. In addition to committing to purchasing 100 Boeing aircraft and other US Defense Equipment.
A supply-chain cooperation will also be implemented, where the two countries will cooperate on securing critical minerals and rare earth elements, as well as developing a modern nuclear capacity to compete with China's rapid nuclear expansion.
Full Deal Term Sheet Here:
Jacqueline Kotkiewicz
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