Japan may soon notify WTO of countermeasures against U.S. tariffs on steel: sources

Kyodo, Reuters

The government may soon notify the World Trade Organization of its plans to consider measures against higher tariffs imposed by the U.S. on steel imports, according to sources close to the matter.

Japan has been lobbying the United States, its key ally, to exempt it from President Donald Trump’s decision to impose higher tariffs in the interest of “national security”. But the request has not yet been met.

For its part, the Tokyo apparently seeks to make its stance clear and advance future ministerial negotiations with an eye to gaining leverage.

Under WTO rules, when a country raises tariffs to protect its domestic industry, affected countries can do the same to cancel out the impact.

The envisaged move is different from a dispute settlement under the WTO.

The Trump administration has imposed tariffs of 25 percent on steel and 10 percent on aluminum imports.

With the move resulting in an additional ¥50 billion ($452 million) in tariffs, Japan’s government is expected to consider countermeasures with the figure in mind. But it does not plan to identify specific items, according to the sources.

“We will decide whether to actually raise tariffs depending on future developments,” a government source said.

Japan has refrained so far from following in the footsteps of China and the European Union, which responded to the U.S. decision with reciprocal threats.

That may change as months of negotiations have failed to convince Washington to add Japan to a list of countries exempted from the U.S. tariffs, analysts say.

Analysts see such a threat as more of a negotiating tactic to improve the chances of getting a U.S. exemption, though it would be a notable shift from Tokyo’s fairly subdued tone.

“This would be a half-step forward since up till now, Japan was just making requests to the United States for an exemption,” said Junichi Sugawara, an analyst at Mizuho Research Institute.

“But there’s still some distance from actually slapping (on) penalties,” he said.

Chief Cabinet Secretary Yoshihide Suga conceded the government was considering taking “necessary” steps based on WTO rules. But he said no final decision has been made on whether to take retaliatory measures.

Trump decided in March to impose import duties of 25 percent on steel and 10 percent on aluminium, drawing criticism from other countries for heightening the risk of a global trade war.

The European Commission has insisted the European Union be granted a permanent exemption without conditions. It has threatened to respond with its own duties on U.S. goods and will notify the WTO of its potential plans this week.

China has increased tariffs by up to 25 percent on 128 U.S. products, escalating a dispute between the world’s biggest economies.