Japan's urgent "exemption" request: asking the U.S. to cancel the 15% tariff increase in an effort to mitigate trade shocks

Bloomberg News has learned that Japan has requested the United States to exempt it from planned tariff increases (from 10% to 15%)—highlighting concerns that higher tariffs could harm Japan’s automotive industry. Japanese Minister of Economy, Trade and Industry Akazawa Ryo, speaking in Washington after meeting with U.S. Commerce Secretary Howard Lutnick on the eve of the March 19 U.S.-Japan summit, stated to reporters:

“We request that Japan not be included in any measures raising tariffs to 15%.” He also emphasized that Japan’s treatment “should not be less favorable than under last year’s U.S.-Japan agreement.”

This request from Tokyo underscores concerns that higher tariffs could undermine the concessions Japan made in 2025, especially in its largest manufacturing sector—automobiles. Although the U.S. Supreme Court has declared most of President Trump’s previous tariff policies invalid, tariffs on cars, steel, and aluminum remain in effect—meaning that if the U.S. expands its tariff scope, Japan’s gains could be very fragile.

The negotiations are not only about trade balance but also about the Strategic Investment Initiative (SII), a $550 billion plan aimed at directing Japanese funds into U.S. projects. Under the agreement, if Tokyo fails to provide funding on time, the U.S. can raise tariffs.

Japan has committed up to $36 billion for the first round of funding, including the construction of a 9.2 GW natural gas power plant in Ohio. Local media reported on Saturday that Tokyo is considering providing about 15 trillion yen ($951 billion) for the second round of funding, with Westinghouse Electric’s nuclear reactors as one of the core projects.

Akazawa said, “We had in-depth ministerial discussions on the strategic investment initiative and confirmed that we will continue to coordinate closely to jointly develop future projects.” He added that, while confirming progress on the first round of investments, “the focus of this meeting is on the second round and subsequent projects.”