Trade negotiations between Japan and the United States remain at an impasse despite months of dialogue and earlier suggestions by Japan that progress was being achieved, with some analysts forecasting a breakthrough only after duties hit the U.S. economy in the fall and force a settlement.

Central to the stalemate are tariffs on automobiles. Japan wants them lowered, while the United States has said that the 25% additional duty put into place by the administration of U.S. President Donald Trump is not up for discussion. It insists that the main subject of talks now are "reciprocal" tariffs set to kick in on July 9, which, if implemented, would take tariffs on most Japanese goods to 24% from the current 10%.

In comments Sunday in the United States, Trump indicated that the United States is dissatisfied with the state of trade with Japan and suggested that there is little interest in retreating from the initial negotiating position.

“I’m going to send letters. That’s the end of the trade deal,” Trump said in a Fox News interview.

“I could send one to Japan. ‘Dear Mr. Japan, here’s the story: You are going to pay a 25% tariff on your cars.’ They won’t take our cars, and yet we take millions and millions of their cars into the United States. It's not fair. And I explain that to Japan, and they understand it.”

Ryosei Akazawa, Japan’s chief tariff negotiator, declined to comment on Trump’s remarks after returning to Tokyo on Monday afternoon.

“Continuing to face a 25% tariff in this area would cause serious harm and economic losses,” he said in discussing the duties on autos, while dodging questions about Japan's current demands.

Trump’s remarks were broadcast while Akazawa was in Washington for the seventh time since mid-April to discuss tariffs. He was engaged in the first high-level talks between the two countries since Prime Minister Shigeru Ishiba and Trump met in Canada earlier this month and failed to achieve any tangible results during a 30-minute discussion.

Akazawa met with Commerce Secretary Howard Lutnick for about 65 minutes on Friday and followed up with two 15-to-20-minute phone calls a day later. A statement by the Japanese government summarizing the discussions did not mention any concrete progress achieved during the talks.

Takahide Kiuchi, executive economist at Nomura Research Institute, wrote in a Monday report that public dissatisfaction with the Trump administration is likely to grow if tariffs push up prices, and the United States might be compelled to lower the tariffs as early as this fall.

“Should that happen, ongoing bilateral tariff negotiations — including those with Japan — may effectively dissolve on their own,” Kiuchi wrote, while warning that even if the tariffs were to be lowered, a weaker dollar policy might come next as a new source of pressure for Japan.

So far, prices have been relatively stable in the United States, with key inflation indicators running in the 2% range and at or near multiyear lows.

“I think we’ll start seeing worse numbers from June onward,” said Masamichi Adachi, UBS Securities’ chief economist for Japan. “I think it’s clear the U.S. economy is heading downward. I don’t know how bad it will get or how long the weakness will last, but the direction is unmistakable — things are turning worse.”

But he is skeptical about the assessment that weakness in the United States will force Trump's hand in tariff negotiations.

“That’s only going to happen after the economy worsens or stock prices crash,” Adachi said. “So I don’t share the current optimism in the market — the idea that if we just wait, the U.S. will lower tariffs on its own. I really don’t think it’s that simple.”

Japan is already feeling the effects of U.S. tariffs. Exports to the U.S. declined by 11% year on year in May, with automobile exports down 24.7%. In terms of volume, the decline was only 3.9%, indicating that Japanese automakers may have reduced vehicle prices to mitigate the tariff effects.

“The drag on the Japanese economy from the tariff shock will be inevitable not only through the direct impact of lower export volume, but also the indirect burden of lower profits due to lower export prices,” Adachi wrote in a report published on June 20.

“For Japan to get the U.S. to lower auto tariffs, it would need to have something that America really wants — like China’s rare metals, for example. But Japan doesn’t have that kind of bargaining chip,” Adachi said.

“The best-case scenario right now would be to keep the reciprocal tariff at 10% and avoid it going back up to 24%. That alone would be a win.”

Treasury Secretary Scott Bessent, who was appointed to lead negotiations with Japan, has signaled that an extension of the July 9 deadline to Sept. 1 might be possible.