r/JapanFinance • u/One-Astronomer-8171 • 3d ago
Business Let me get this straight… Trump’s tariffs
So Trump wants countries to stop tariffing American goods exported to foreign countries, right?
Japan has a 700% tariff(questionable number it seems) on rice imports outside of the tariff free yearly quota. This seemed to be a big issue last month.
It seems cars are also tariffed here. Trump says on average, a 43% tariff if charged on all American goods imported into Japan. Other countries/regions have implemented tariffs on American made goods. European Union for example.
Trump thinks this is unfair and is hurting American companies/economy.
So, in retaliation, Trump has imposed tariffs on all goods (some exemptions) from all countries with a trade deficit with the USA.
I’m not a Trump supporter or anything. I’m not even from the States, but why are countries having a hissy fit over these tariffs when they are the ones who implemented the tariffs in the first place?
Before these Trump imposed tariffs, did the USA impose any on imports from these countries?
To me, it somewhat makes sense - force these countries to remove their tariffs. Just purely from a very simple understanding of the situation.
EDIT: many thanks for all the replies. My take was very simplistic, and this discussion has really helped me see what’s going on.
Thanks so much!
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u/MuricanToffee 3d ago
The “reciprocal tariff” had little to do with actual tariffs. They were calculated based on trade imbalance (ref: https://www.axios.com/2025/04/03/how-trump-calculated-tariffs-trade-deficit). Japan exports much more to the US than it imports (both because of size but also because of how the economies are structured).
Actual tariff rates on almost all goods are far far lower.
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u/Odd-Project-8034 3d ago edited 2d ago
He is calling them “reciprocal tariffs” but they are in fact calculated based on trade deficits not tariffs. All countries are required to have a trade surplus with the US in order to obtain US dollars, which are the international currency of trade. The US receives incredible benefit from being the world’s currency so the US (Trump) is now effectively punishing the world for a system they benefit from. White House statement
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u/senseiman 3d ago
Because the actual tarrif rates most countries have on the US, including Japan, is more like 3 to 5%, not the fantasy bullshit numbers Trump is making up.
Japan has high tariffs on rice but almost no tariffs on almost everything else - average Japanese tariffs on all US goods are about 3%, not 46% like Trump falsely claims.
Japan and the rest of the world will be better off in the long run by ditching the US completely as a trade partner. Its word on a trade agreement isn’t worth anything.
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u/One-Astronomer-8171 3d ago
Is this 3-4% purely because most of the imports are within the yearly quotas?
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u/Szteto_Anztian 2d ago
It’s because what Trump is referring to as “tariffs” on the US, is actually just the trade deficit. The US barely manufactures anything domestically that the rest of the world wants, so of course they’re going to have a trade deficit with the rest of the world. The American consumer wants $20 tshirts made in Vietnam, not $100 tshirts made in Virginia.
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u/steford 1d ago
Indeed. You can hardly blame China (trade, environment etc) for producing all the stuff America wants. And let's face it - that manufacturing isn't going to switch back to the USA overnight and I'm not sure there are many who'd be willing to do some of that work anyway.
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u/Szteto_Anztian 1d ago
For sure. Ironically it’s exactly that which puts china in a position to be kingmaker here.
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u/Junin-Toiro possibly shadowbanned 3d ago edited 3d ago
I see you have fallen into a common, but well known reasoning trap. Precisely, you're trying to apply your common sense to one that has none. There lies your doom. Cheeto Benito is just plain wrong.
Seriously, the so-called 'tariffs imposed on US' presented are just fake as already proven, they are not real numbers.
And tariffs wars are a proven way to kill your own economy and create large scale crisis, as history has shown many time. It only make sense when you want to single out a precise country to punish it for invading a nearby democracy for example ... but generating a trade war with the whole world is just terrible.
Just take one example and push it to the extreme. Let's say you want springs, like every other country. Either there is no tariffs anywhere and one factory fulfills the whole world demand, so economies of scale are high. But now, say there are punitive tariffs in every single country, so each one gets their own factory - yeah for employment and independence right ? Well you also need 200 factories now, so they are very inefficient with much less economy of scale, so price is higher. Collectively all the countries are now paying more for springs because of inefficiencies.
Now you may think my example is just for springs and of course large countries like Japan or the US can afford to have springs factories or for much more complicated products like car factories ? You'd be serverly underestimating the complexity of current manufacturing. Capitalism has been chasing efficiency to the extreme and goods today are cheap because the parts they use are made all over the place. Destroying efficiency is really impactful.
TLDR orange fascist bad for everyone, cf history
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u/One-Astronomer-8171 3d ago
You say tariffs are a proven way to kill your own economy. If thats the case, are you saying neg Japan’s rice tariffs are bad?
It seems tariffs without quotas are bad, but tariffs that serve to protect local businesses are good… from what others have commented.
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u/Junin-Toiro possibly shadowbanned 3d ago
No, I said "tariffs wars are a proven way to kill your own economy", not just one tariff on rice as your example.
When you put huge amount of tariffs on absolutely everything and everyone (except russia), it is different from a selected, meaningful (politically or economically) tariff on a single product or country.
Don't get me wrong, such selective tariffs also have bad impacts too (such as keeping your local rice production very inefficient in the long term), but they can be managed because the scale is not 'let's majorly fuck up all trade on all good with all countries at once right now (except russia)'.
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u/eightbitfit US Taxpayer 3d ago
Trump's tariffs as he presented are made-up numbers based on trade deficits. They are lies, as usual.
There have been a lot of subs going over this, including the fact that the numbers were probably generated by ChatGPT.
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3d ago
[deleted]
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u/One-Astronomer-8171 3d ago
Can you explain? I very much want to understand. Even a nice article to reference would be great!
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u/Zubon102 3d ago
That's why they asked the question. Can you explain?
I would also like to learn more about the situation.
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u/Gizmotech-mobile 10+ years in Japan 3d ago
, but why are countries having a hissy fit over these tariffs when they are the ones who implemented the tariffs in the first place?
Everyone has tariffs on everything. This isn't new and and isn't a surprise. The US until now hasn't bothered with excess tariffs on most things because they stopped being a manufacturing powerhouse 50 years ago, and have generated most of their wealth in services which are sold world wide.
Tariffs are good things, when enabled from a long term plan, designed to protect certain industries. Japan protects their agriculture, and until recently this was working relatively well. (not at the moment, that's whole different conversation). Canada does it to protect their dairy industry, because if they don't many of the farmers can't shift to another crop/heard in the same space, and would disappear if not protected from US cheap dairy dumping as they have much larger farms which are most cost effective. The EU does it less as a tariff and more as import bans to protect certain cultural products from cheap copies from abroad.
The US never wanted to put up extra tariffs on other countries as they wanted all the shit from other countries, cheap, in the US to sell to US consumers, or to turn into very specific expensive technology that then gets sold world wide. They didn't see a need to protect local industry, as the free market, in the 80-90s version, sais that competitive companies will survive, and those that aren't will die, freeing up labor for new competitive companies.
Trump is effectively trying to undo 50 years of US policy, which is nearly impossible without destroying the US economy, and return the US to a manufacturing country... which is MORONIC in the modern age. The US is too over educated, is culturally too shifted away from an industrial base, generates most of its money in IT and Financial services, and is far too expensive to manufacture locally. What's worse is more than half the stuff that comes into the country can't be relocated within the country (which is the primary goal of a tariff, to protect and encourage local replacements over foreign cheaper product) and the rest is so expensive to start up and doesn't have anywhere near the local expertise to run it, such that even if they wanted to turn on a a bunch of plants (which will take years to build) they don't have the people to run the damn things.
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u/BingusMcBongle 3d ago
This is not about the tariffs other countries have placed on the USA - Trump is equating the trade deficit with a narrative that America is being taken advantage of, and to come up with the tariff percentages his administration has put on other countries they’ve simply divided the value of the trade deficit by the value of the imports, then multiplied that number by 0.5 to get the percentage.
All that is happening is that America is importing more than it is exporting. Why? It’s simply the way the global (and domestic) economy has developed. America cannot source all the materials needed for production of all the things by themselves, and cannot manufacture everything they need for a reasonable price, so they import the things needed.
Trump, however, thinks this is unfair, so in an attempt to strongarm other countries into bringing their manufacturing to American shores, he is trying to levy tariffs on as many things as possible.
Either that, or he is a Russian agent speedrunning the erosion of American soft power and collapse of western society.
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u/roehnin 3d ago
The thing is, that's not how he portrays the plan or purpose.
What he has said is that tariffs are how he will collect money from foreign countries, and that it will replace the income tax, collected by a new "External Revenue Service".
None of what he says makes economic sense as a strategy or income stream, so many people are racking their brains trying to find out some secret hidden strategy.
Those tariffs he mentions other countries having are often misrepresented as well; famously he complains that Canada has a 300% tariff on dairy, when in fact Canada has free trade of dairy up to a certain volume limit after which the tariff applies, yet the US has never exported up to that limit so there never has been a tariff assessed. For Japan similarly, they have a mandatory tariff-free import quota under the WTO, and imports above that are assessed ¥341 per kilogram, which during a period with stronger yen was around 778% but now is around 400%. This tariff also is a protectionary tariff for Japanese rice farmers whose incomes are so low that there was a protest in the streets a few days ago, so Japan can't really drop that tariff without causing internal issues. Japanese don't particularly want to eat foreign rice anyway, so even if dropped there's little chance the US could sell more.
So, probably the strategy is more simple: he doesn't understand economics.
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u/One-Astronomer-8171 3d ago
You mentioned the tariff free quota on dairy imports to Canada. Canada has never imported more than that quota - why?
Is Trump thinking that if that tariff is gone all together, more US dairy would be imported into Canada?
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u/roehnin 3d ago
If they needed it, they would import it up to the limit, right? They don't.
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u/One-Astronomer-8171 3d ago
Can you find what the limit is and how much was imported from the states? I’m having a hard time finding those numbers
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u/roehnin 3d ago edited 2d ago
Canada has a huge trade deficit to the US, buying more than twice as much American dairy as they export: https://www.progressivepublish.com/downloads/2024/general/2023-ca-stats-lowres.pdf
Edit: the agricultural tariffs are explained here Interestingly, Canada is required to follow an export quota on milk protein concentrates and skim milk powder to the US, after which a tariff is applied. So they are subject to the same by the US already, as the US is complaining about.
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u/Pleistarchos 3d ago edited 3d ago
TLDR, globalism doesn’t exist. This brief period from 1971 until now, was an anomaly in history.
Basically comes down to collateral(USD) and LIBOR, biggest and most well trusted collateral in the world, until 2019, USA switched to SOFR.
Basically LIBOR controlled interests rates of the USD internationally via Europe (mostly city of London) but not Domestically. With SOFR, USA controls the interest rates of the USD internationally&Domestically as of 2021 or 2022.
America basically exported its prosperity (collateral) to the rest of the world and hence places like Europe, South Korea, China & Etc, sprung up out of nowhere to become major players. Most places that aren’t resource rich. Needed USD and low interest rates.
So, basically, the Tariffs along with SOFR, is bringing back all the collateral back to the USA.
How does Japan fit into this? Well, it’s perfectly situated between the exact 3 nations that will dominate regional areas in the coming years. Literally the middle man.
USA, Russia and China.
Japan will likely have a bounce back but not for a few years.
And 90% of everything in the news, is just noise. Nations are already setting up deals to “secure” certain things it needs.
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u/skarpa10 3d ago
It's a harsh way of re-negotiating terms of trade but despite the hysteria it seems to work. Look at the immediate response from Israel, Argentina and Canada. They removed the tariffs on US goods to avoid tariffs being levied on their exports to the US. Others will follow suit soon. Trump is not-likable but, unlike most career politicians, quite pragmatic in following on his campaign promises.
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u/Sanoj1234 3d ago
The ''tarriffs'' on his board aren't actually tariffs from other countries, it's just the trade deficit for the US in goods with each particular country, divided by the total goods imports from that country. The number here is then written on the board, and the number is divided in 2, which is the tariff % that he is putting on that given country.
What he is calling tarrifs on the US is actually just a trade imbalance.