Japan to resist Trump efforts to form trade bloc against China #JapanFinance

(Bloomberg) — Japan intends to push back against any US effort to bring it into an economic bloc aligned against China because of the importance of Tokyo’s trade ties with Beijing, according to current and former Japanese government officials.

Most Read from Bloomberg

Like many other countries, Japan is trying to get permanent relief from President Donald Trump’s tariffs by addressing US concerns in areas of bilateral trade, including automobiles and agriculture. The officials, who asked not to be identified, said that Japan is pushing to strike a deal before the current 90-day reprieve in tariffs expires, with one person saying the country hopes to finalize an agreement around the Group of Seven summit in June.

At the same time, the officials said Japan doesn’t want to get caught up in any US effort to maximize trade pressure on China by curbing its own economic interaction with Beijing, which is Tokyo’s biggest trading partner and an important source of goods and raw materials.

Although the US hasn’t made any specific requests to Japan regarding China, Tokyo would prioritize its own interests if that occurs, Japanese officials say. One of the officials added that Japan has conveyed to China on multiple occasions that it doesn’t fully align with the US on chip-related exports and semiconductor restrictions.

Japan’s Foreign Ministry didn’t immediately provide comment when requested by Bloomberg.

Treasury Secretary Scott Bessent, who is playing a leading role in trade talks with Japan and other nations, said earlier this month that the US would seek to reach agreements with allies and “then we can approach China as a group.” Bloomberg subsequently reported that the US is preparing to ask countries seeking tariff relief to reduce economic ties to China in a move to strengthen US leverage over Beijing as it tries to win concessions on trade.

Japan’s lead trade negotiator Ryosei Akazawa deflected a question about Bessent’s comments on Friday.

“My mission is to request a review of the additional tariffs,” said Akazawa, who is scheduled to return to Washington for a second round of talks with US officials soon.

“The US may try to do something collectively with other nations that also reach a deal with the US. But that will be beyond my responsibilities.”

‘Resolutely Opposes’

Japan is now weighing up its concessions ahead of the second round of trade talks.

That could be made in agriculture, with the Yomiuri newspaper saying the government was considering buying more US corn, while the Nikkei said a boost in soybean imports was on the cards. Public broadcaster NHK said the government was looking to present an overview of investments that Japanese automakers were planning in the US.

Katsunobu Kato, Japan’s finance minister, dampened speculation that the US would make requests over the weak yen, saying that foreign exchange targets had not been discussed during talks on Thursday with Bessent.

As Japan gears up for the trade talks, Prime Minister Shigeru Ishiba is also seeking to cushion the blow that the US tariffs may have on the domestic economy. He announced an emergency economic package that will help smaller businesses and the agriculture industry.

But as Japan works towards closing a deal with the US, President Xi Jinping’s government has warned countries against striking deals with the US that also target Beijing, saying on Monday it “resolutely opposes any party reaching a deal at the expense of China’s interests.”

“We need to be very careful about economic security issues and the supply chain involving China,” Kono Taro, a lawmaker in Japan’s ruling Liberal Democratic Party and former foreign minister, said in an interview with Bloomberg TV on Wednesday.

Rather than dialing back trade, Tokyo is in the process of trying to get China to resume imports of seafood and beef from Japan. That has been evident over the past few weeks, with a series of Japanese delegations making trips to China to manage Tokyo’s relationship with Beijing.

On Wednesday, Tetsuo Saito, leader of the Komeito Party — the junior partner of the ruling coalition — passed a letter from Ishiba for Xi to China’s no. 4 official, Wang Huning during a visit.

Afterward, Saito said that both sides agreed to support the multilateral trading system and independently push the Trump administration to ease tariffs. The ruling party’s secretary general is also set to fly to Beijing on Sunday.

In a sign of Japan Inc.’s commitment to the China market, Toyota Motor Corp. (TM) this week agreed to open a new factory in Shanghai in 2027, with the company reportedly planning to invest around $2 billion in the plant.

Around 20% of Japan’s total commerce is with China, larger than its trade with the US. However, the US overtook China as an export destination for Japan in 2023, extending that lead last year. Japanese firms have become more pessimistic on the opportunities in China, with many cutting back investments as their revenue falls due to the weak Chinese economy and other factors.

Japanese manufacturing was hit hard when China restricted the export of rare earths to Japan in 2010 amid a political dispute. After that, Japanese industry and government made a concerted push to diversify supply, investing in Australia and elsewhere to reduce some of their reliance on China.

Japan is wary of similar restrictions after Beijing earlier this month added seven rare earths to its export control list in response to punitive tariffs imposed by Washington. Saito said he asked Chinese officials to make the “correct decisions” with regards to the handling of rare earths.

Japan needs to walk a tightrope over US-China relations because it also leans heavily on the US as it sole formal security ally. The largest overseas US military troop presence is based in Japan, and Trump has in recent days resumed his long-standing demand for Tokyo to pay more for US military bases.

But any demands from Washington on Tokyo to downgrade its economic relationship with China would potentially deal Japan a major economic blow.

“It’s going to be really, really bad for Japan if it sees a drop in trade both with the US and China,” said Yu Uchiyama, a professor of political science at the University of Tokyo. “If policymakers say let’s abandon China, business people will of course oppose it.”

—With assistance from James Mayger, Yuko Takeo and Mari Kiyohara.

(Updates with details of Japan’s delegation to Beijing)

Most Read from Bloomberg Businessweek

©2025 Bloomberg L.P.