In a letter to the congress, The United States President Donald Trump said that his government finally reached a first trade deal regarding trade barriers with Japan.
"I am pleased to report that my administration has reached an initial trade agreement regarding tariff barriers and digital trade with Japan" stated Trump in the letter, adding that he intends to enter into the agreement in the upcoming weeks.
The United States government officially notified the congress concerning their negotiations with Japan in October 2018. At that moment,Trump's administration suggested that the best way of pursuing a trade deal with the Asian country was doing so in stages.
The reason for this is the United States government's insistence on having more favorable trade terms with Japan, as the trade balance heavily favors the latter. Hence Trump has threatened several countries with raising tariffs on their exports if he doesn't get more favorable terms for the U.S.
At the moment, the U.S. trade deficit with Japan stands at around $67 billion, being cars the main imports that the country gets from Japan.
"My administration looks forward to continued collaboration with the Congress on further negotiations with Japan to achieve a comprehensive trade agreement that results in more fair and reciprocal trade between the United States and Japan," added Trump.
A currency provision that would help to avoid one of the parts use currency devaluation in order to obtain competitive advantages, would not be included in this trade deal, according to the Japanese finance minister Taro Aso.
However, the United States has insisted in the past that such a provision must be included in any trade deal with Japan.
“I think we’ll want to make sure whatever trade agreements there are, that there are currency provisions that reflect that in the agreement similar to USMCA and as we’ve alluded to in our China discussions,” said the United States Treasury Secretary Steven Mnuchin on April.
Japan has been accused in the past of employing monetary easing to devaluate its currency, making exports cheaper and imports more expensive.
By 10:45 GMT the USD/JPY pair was up 0.04 percent, at 108.17. The EUR/JPY was at 119.20, rising 0.22 percent while the GBP/JPY was at 134.23, losing 0.11 percent.