What does the US and Japan trade transaction mean for Asia and the world

US President Donald Trump called The agreement he reached with Japan is “the largest trade transaction”.

This may be premature to make such claims, but it is definitely the most significant transaction, as Trump has announced his so -called release tariffs on the day of his release in April, in which the stock markets were confused and chaos for global trade.

After a few months of talks, Japanese Prime Minister Shiger Iszib said he expects a deal to help the global economy.

This is a big claim. BBC studies whether it will, and if so?

Japan is the fourth largest economy in the world, that is, it is a considerable part of global trade and growth.

Tokyo imports a large amount of energy and food from the border and depends on export, including electronics, machines and cars.

The US is its largest export market.

Some experts have warned that Trump tariffs could hit as much as the percentage point from the Japanese economy, pushing it to the recession.

With smaller tariffs, exporters will be able to make businesses in the US cheaper than when Trump has followed an earlier threat to recover higher taxes.

And the transaction brings a certainty that allows you to plan businesses.

The announcement also strengthened Japanese against the US dollar, giving producers a greater buyer’s ability to purchase the necessary raw materials to expand its business.

The US agreement is especially good for Japan’s car giants such as Toyota, Honda and Nissan. Previously, American importers had to pay 27.5%when they were departing to Japanese cars.

Now it decreases to 15%, which potentially makes Japanese cars cheaper compared to China’s competitor.

Having said this, American carmakers signal that they were dissatisfied with the deal.

They are concerned that they have to pay 25% tariff for their factories and suppliers in Canada and Mexico compared to Japan’s 15% rate.

In return for reduced tariffs, Japan suggested investing $ 550 billion in the US to make Japanese firms “built supplies in key sectors, such as pharmaceuticals and semiconductors,” ISIB said.

Japan is already a major investor in the US, but this amount of money must create jobs, produce quality products and promote innovation.

According to the transaction, Trump said Japan would increase agricultural purchases such as the USA who can help the country deficit rice – Even if it can get into local farmers who are concerned about market share loss.

The 15% tariff is also a benchmark for other countries, such as South Korea and Taiwan, which negotiate with the United States.

South Korean Industry Minister said he would look closely at the fact that Japan had agreed with the US when he headed for Washington for trade negotiations.

Japan and South Korea compete in areas such as steel and toss.

Overall, the transaction of the United States and Japan will put more pressure on other countries – especially major exporters of Asia – to provide the best agreements before the August 1 term.

Deals with Indonesia and Philippines have already been announced

But some Asian countries will suffer.

Lesser economies as Cambodia, Laos and Sri Lanka produce exporters, and they offer little Washington in terms of trade and investment.

There have been reports that the United States called on Japan to increase military expenses.

But the tariff messenger in Tokyo specified that the transaction does not include any defense costs.

Ryosei Akazawa added that steel and aluminum tariffs will remain at 50%.

Both can be victories for Japan because it exports more vehicles to the United States than steel and aluminum.

Pressure in the US to get so much of these transactions on the line before it imposed the tariff period of August.

Along with the US negotiations, countries can start looking for more reliable partners elsewhere.

On the same day, when Washington and Takka announced their agreement, Japan and Europe pledged “more closely to resist economic coercion and solving unfair trade practice,” the European Commission President Ursul von der Leyen reports.

The European Union has not yet agreed with the US trade transaction.

“We believe in global competitiveness, and this should benefit everyone,” said Mr. Layen von der.