As global leaders gather for the G7 summit in Canada, one bilateral meeting is drawing outsized attention between US President Donald Trump and Japanese Prime Minister Shigeru Ishiba.
At stake is a potential trade deal that could reshape economic ties between the world’s largest and fourth-largest economies. But with pressure mounting on both sides, the road to an agreement remains fraught.
A handshake, but no breakthrough
On Monday, President Trump and Prime Minister Ishiba met for 30 minutes on the sidelines of the G7 summit in Charlevoix, Alberta, as per the Japanese government. Official images released showed the two leaders smiling, but Tokyo offered no details on the content of their talks.
The lack of a public outcome underscores the high stakes and political caution surrounding Japan’s efforts to secure a reprieve from steep US tariffs, especially on automobiles.
According to Japan’s Ministry of Finance, the 25 per cent tariffs imposed by Washington in April 2025 now affect nearly $40 billion worth of Japanese car exports to the US—nearly a fifth of Japan’s total exports to America.
No ‘quick fix’, says Ishiba
Ahead of the summit, Prime Minister Ishiba had set the tone for Japan’s position. Speaking in Tokyo on June 12, he declared that Japan would not be rushed into a “quick fix” trade deal.
“If there’s progress before I meet the president, that’s in and of itself good,” he said, as quoted by Bloomberg. “But what’s important is to achieve an agreement that’s beneficial to both Japan and the US. We won’t compromise Japan’s interests by prioritising a quick deal.”
The remarks reflect Tokyo’s deep concern over the potential economic fallout from the tariffs. Japan’s Ministry of Economy, Trade and Industry (METI) has warned that the levies could push the nation into a technical recession, particularly as industrial output and consumer spending remain subdued following a sluggish first quarter in 2025.
Rising stakes for Ishiba at home
For Prime Minister Ishiba, the stakes are not just economic—but political. He faces a crucial general election next month, and returning from the G7 without a trade resolution could fuel criticism from opposition parties and industry leaders alike.
On June 12, Ishiba met with opposition chiefs in Tokyo, describing the trade standoff as a “national crisis” that required bipartisan unity, as reported by Bloomberg. His government is also dispatching top trade negotiator Ryosei Akazawa to North America this week in a last-ditch effort to seek exemptions or adjustments to the tariffs.
According to Bloomberg, many G7 leaders are seeking last-minute deals with Trump to prevent additional tariffs scheduled to take effect in July, a tactic widely seen as part of Trump’s broader strategy to extract concessions ahead of his re-election bid.
Tariffs rooted in Trump’s ‘national security’ clause
The current standoff was triggered by Trump’s April executive order, which cited national security concerns to justify sweeping tariffs on automotive imports, particularly from Japan.
The move revived fears of a trade war reminiscent of earlier US–China clashes. In 2024 alone, Japanese exports to the US totalled over $135 billion, making America Japan’s second-largest trading partner after China, according to Japan’s Ministry of Finance.
“The auto sector is Japan’s backbone,” noted Noriko Hama, professor of economics at Doshisha University, speaking to Nikkei Asia. “A prolonged tariff regime could ripple through employment, production, and consumption. Japan cannot afford to be seen as conceding too much—but nor can it afford a breakdown in US relations.”
G7 backdrop: Global trade on edge
The G7 summit itself has become a crucible for global trade tensions, with EU and Canadian leaders also pressing Trump to roll back tariffs. The Charlevoix summit is officially focused on economic cooperation and supply chain resilience, but trade friction has dominated the closed-door talks.
While no formal US–Japan bilateral was announced, both sides signalled openness to further engagement. “We are not going to negotiate under pressure or media spectacle,” a senior Japanese trade official said, speaking to Reuters on condition of anonymity. “We seek a rules-based outcome with mutual respect.”
Trump, meanwhile, has remained characteristically bullish. Speaking at the summit, he reiterated his commitment to “fairer deals” and called on partners to “open their markets more fully to American goods,” as quoted by Reuters.
Outlook: Calm, but cautiously tense
Despite the smiles at the G7 photo-op, there is little clarity on when or whether a trade deal will emerge. Analysts suggest that Japan may seek to delay any final agreement until after the July tariff deadline, banking on continued diplomatic engagement or a softening of the US stance.
However, the clock is ticking. With domestic industry leaders growing anxious and opposition parties sharpening their attacks, the Ishiba government faces a narrowing window to show results.
As the G7 wraps up, one thing is clear that the US–Japan trade ties are entering a volatile new phase, one where economics, diplomacy, and political survival are tightly intertwined.
(With inputs from the agencies)
AloJapan.com