U.S.-Japan Signs Limited Trade Deal: 3 Winners

 | Sep 25, 2019 09:26PM ET

The United States and Japan finally take a step forward to ease trade issues prevailing since President Trump opted out from the Trans-Pacific Partnership and imposed higher tariffs on Japanese auto.

The limited deal signed as a sideline to the United Nations General Assembly in New York will reduce Japanese tariffs on beef, pork and agricultural products, while removing tariffs on digital commerce completely. America, on the other hand, will be reducing tariffs on machines, bicycles and more goods from Japan. The deal will be effective in January with further trade deal talks beginning in the first quarter of 2020.

“Tremendous Trade Deal” Signed

On Sep 25, the U.S. President and Japanese prime minister Shinzo Abe signed a partial trade deal at the U.S. Chamber of Commerce. As per the agreement, Japan will reduce tariffs on beef and pork as well as eliminate staged tariffs on cheeses, processed pork, poultry, beef offal, ethanol, wine, frozen potatoes, oranges, fresh cherries, egg products and tomato paste.

This deal has definitely brought relief to U.S. farmers who were having a hard-time due to the U.S.-China trade war. The deal has a country-specific import quota for wheat and wheat products but will remove tariffs on almonds, walnuts, blueberries, cranberries, sweet corn, grain sorghum and broccoli, immediately.

Further, tariffs will be completely removed on digital commerce that includes digitally traded videos, music and software, and open doors to data flows between the two countries for free as well as prevent data localization requirements.

In 2018, Japan, the forth-largest goods trading partners of America, had been hurt by Trump’s higher tariff imposition on Japanese automobiles and parts. Japan was in a rift with the United States since Trump opted out of the Trans-Pacific Partnership in the beginning of his term.

On signing this deal, the U.S. Trade Representative Robert Lighthizer also offered reassurance that no additional tariffs will be charged on Japanese automobile or auto parts. Further, as part of the deal, the United States has agreed to cut import duties on Japanese goods that include turbines, machine tools, bicycles, green tea, cut flowers and musical instruments.

This partial deal will be effective from January and negotiations on bigger trade deal will start after April 2020. American farmers have been suffering huge losses for a long time as its biggest agricultural importer, China, had halted imports. This deal will shower some relief on them.

3 Winning Stocks

This U.S.-Japan limited trade deal seems to be a bonus for the farmers. Though this deal will not reap high benefits as the Trans-Pacific Partnership would for farmers and ranchers, it will definitely benefit them.

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