Japanese Prime Minister Shigeru Ishiba said on Monday his country does not plan to make big concessions and won't rush to reach a deal in upcoming tariff negotiations with U.S. President Donald Trump's administration.
Japan, a long-time U.S. ally, has been hit with 24% levies on its exports to the United States though these tariffs have, like most of Trump's sweeping "reciprocal" tariffs, been paused for 90 days.
But a 10% universal rate remains in place as does a 25% duty for cars, which is set to be particularly painful. The U.S. is Japan's biggest export destination and automobile shipments account for roughly 28% of its exports there.
The two countries will begin trade talks on Thursday in Washington that are expected to cover tariffs, non-tariff barriers and exchange rates.
"I'm not of the view that we should make big concessions for the sake of wrapping up negotiations quickly," Ishiba said in parliament, though he ruled out slapping Japanese tariffs on U.S. imports as a countermeasure.
"In negotiating with the United States, we need to understand what's behind Trump's argument both in terms of the logic and the emotional elements behind his views," Ishiba said, noting that U.S. tariffs have the potential to disrupt the global economic order.
Bank of Japan Governor Kazuo Ueda warned of forthcoming pain.
"U.S. tariffs will likely put downward pressure on the global and Japanese economies through various channels," Ueda told the same parliament session.
In addition to its large trade surplus with the U.S., Trump has also accused Japan of intentionally maintaining a weak yen - leading to expectations that Tokyo could come under pressure to strengthen its currency - even though a broad dollar sell-off has pushed up the yen of late.
The slow pace at which the Bank of Japan is raising borrowing costs from ultra-low levels could also come under fire in the talks, sources have previously said.
Economy Minister Ryosei Akazawa, who will lead Japan's delegation, said any discussion on currency rates will be held between Japanese Finance Minister Katsunobu Kato and U.S. Treasury Secretary Scott Bessent.
"Both countries share the view that excessive market volatility would have adverse effects on the economy," Kato said.
Any discussion on the yen may spill over to monetary policy and complicate the BOJ's decision on how soon, and by how much, it should raise still-low interest rates.
Akira Otani, a former top central bank economist who is currently managing director at Goldman Sachs Japan, said the BOJ could consider halting interest rate hikes if the yen were to approach 130 to the dollar.
Conversely, a yen slide below 160 could bring forward or accelerate future rate hikes, he said.
The dollar fell 0.62% to 142.62 yen on Monday.
Japan has historically sought to prevent its currency from rising too much, as a strong yen hurts its export-reliant economy. But a weak yen has become the bigger headache in recent years as it has boosted import costs and hurt consumer spending.
Ruling and opposition party lawmakers have escalated calls for the government to cut tax or offer cash payouts to cushion the economic blow from rising living costs and Trump's tariffs.
Ishiba said the government is not thinking of issuing a supplementary budget now, but stood ready to act in a timely fashion to cushion any economic blow.
