U.S. President Donald Trump and Japanese Prime Minister Shigeru Ishiba concluded the G7 Summit in Canada without reaching a trade pact, a result Bloomberg says “draws Japan closer to recession” as U.S. tariffs continued to bite domestic industries.
Ishiba told reporters they “remain apart on certain issues” and pledged to “continue to actively coordinate” while protecting Japan’s interests. Trump called the meeting “great” but insisted that Japan either pay the tariffs or face restrictions, warning: “The Japanese are tough…we’ll send a letter stating what you must pay.”.
Japan PM Ishiba and President Trump failed to reach a trade deal at G7—another sign that tariffs remain a key tension point. pic.twitter.com/sampleTrade
— Reuters (@Reuters) June 16, 2025
Auto tariffs loom largest: Japan is facing a 25% duty on cars and auto parts and a 50% tariff on steel and aluminum. If reciprocal duties rise from 10% to 24%, Japan’s GDP could decline by approximately 2.2% by 2029. The auto sector alone employs 5.6 million people—8.3% of the workforce—and stands to lose around $19 billion this fiscal year .
Despite six negotiation rounds involving Tariff Chief Ryosei Akazawa and three calls between the leaders, no agreement was reached. Analysts say Ishiba avoids a rushed deal before next month’s Upper House election, preferring to show resolve over rushed compromise.
Ishiba emphasized Japan’s economic contributions to the U.S. and warned tariffs could erode its ability to invest in American projects. Meanwhile, Tokyo pushes for tariff exemptions on autos and seeks assurances from Washington before the July 9 deadline.
Complicating matters, global markets are jittery due to rising Middle East tensions—particularly the Israel–Iran conflict—and Trump’s early exit from the summit amid national security concerns, underscoring how geopolitical risks are overshadowing trade discussions.
Next steps: Negotiations will continue at the upcoming NATO summit in The Hague (June 24), though Tokyo remains firm that no deal is better than a bad deal. The shadow of Japan’s upper-house elections adds urgency and political stakes to the ongoing talks.