(Bloomberg) -- The U.S. and Japan signed a limited trade deal intended to boost markets for American farmers and give Tokyo assurances, for now, that President Donald Trump won’t impose tariffs on auto imports.The accords on agriculture and digital trade cover about $55 billion worth of commerce between the world’s largest- and third-biggest economies, U.S. Trade Representative Robert Lighthizer said at a ceremony in the Oval Office alongside Trump.The accord is a “game changer for our farmers” and ranchers, Trump said at the event.The goal is for the accord to take effect Jan. 1.Trump, who faces re-election next year, was eager to make a deal with Japan to appease U.S. farmers who have been largely shut out of the Chinese market as a result of his trade war with Beijing. American agricultural producers, also reeling from bad weather and low commodity prices, are a core component of Trump’s political base.Under the deal, Japan will lower or reduce tariffs on some $7.2 billion of American-grown farming products, including beef and pork.Prime Minister Shinzo Abe’s priority was to win a pledge that the U.S. won’t slap tariffs on Japanese automobile exports, a sector valued at about $50 billion a year and a cornerstone of the country’s economy.Read more: Click here for the most recent research from Bloomberg EconomicsThe written text of the deal doesn’t explicitly cover auto tariffs, but Abe has said he received assurances that Japan would be spared from them.The proposed pact won’t lower the barriers protecting Japan’s rice farmers -- a powerful group supporting Abe’s ruling Liberal Democratic Party. This could help the prime minster smooth the deal’s course through parliament, where it must be ratified before coming into effect.The U.S. has said this agreement -- which was signed in principle on the sidelines of the United Nations General Assembly last month -- is just the first phase of a broader agreement.To contact the reporters on this story: Justin Sink in Washington at email@example.com;Jennifer A. Dlouhy in Washington at firstname.lastname@example.org;Brendan Murray in London at email@example.comTo contact the editors responsible for this story: Margaret Collins at firstname.lastname@example.org, Sarah McGregor, Robert JamesonFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
WASHINGTON – President Donald Trump is scheduled to sign a limited trade agreement Monday with Japan, a deal that would win back benefits American farmers lost when Trump pulled out of a broader Asia-Pacific pact his first week in office.
U.S. farmers have been operating at a disadvantage in Japan since Trump withdrew from the Trans-Pacific Partnership agreement, which had been negotiated by the Obama administration. The other 11 Pacific Rim countries, including big farm producers such as New Zealand and Canada, went ahead without the United States and were enjoying preferential treatment in Japan.
The Washington wheat industry welcomed the agreement when it was first announced last month. Japan traditionally has been among the biggest importers of the region’s wheat.
“The main thing is it gets us to an equal footing with our competitors as far as a price standpoint. This is just great news,” Michelle Hennings, executive director of the Washington Association of Wheat Growers, said at the time.
Trump earlier had put Washington wheat markets in jeopardy when he decided in 2017 to pull the United States out of the Trans-Pacific Partnership, which put U.S. wheat farmers at a graduating trade disadvantage to both Canada and Australia.
While rewarding American farmers, the new U.S.-Japan mini-deal does not resolve differences over trade in autos. Trump has said the two countries continue to work on a more comprehensive agreement.
Trump has threatened to impose import taxes on foreign autos, claiming they pose a threat to U.S. national security. At the U.N. general assembly, Japanese Prime Minister Shinzo Abe told reporters that Trump had assured him that a previous agreement to spare Japan from new auto tariffs still stood.
But Japanese automakers were disappointed that the United States kept existing auto tariffs at 2.5%.
The limited trade pact also includes market-opening commitments on $40 billion worth of digital trade between the two countries.
Trump has long complained by America’s large trade deficit with Japan, which came to $58 billion last year. Japan is the world’s third-biggest economy behind the United States and China.
The president was set to sign the deal at the White House Monday afternoon.
The news might sound familiar. The deal was first announced at the August Group of 7 summit in Biarritz, France. At the UN gathering last month, the two countries signed an agreement-in-principle. On Monday, Trump was scheduled to sign the final text.