Japan may impose retaliatory duties on U.S. steel products, including ball bearings, in September to counter subsidies paid out to steel firms by Washington under an antidumping program that has been ruled illegal by the World Trade Organization.

This would mark Japan's first retaliatory tariff hike in connection with a bilateral trade spat.

"It is common sense to follow designated procedure," over violations of international trade agreements, Chief Cabinet Secretary Hiroyuki Hosoda said Thursday. "We're just following the rules -- we shouldn't be concerned about whether this will hurt bilateral relations."