Japan, U.S. ministers reached trade agreement in mid-June: sources
Over the following month, Japan focused on convincing U.S. President Donald Trump through Lutnick of the advantages of the agreement, with the proposal of expanding imports of U.S.-grown rice used as the final bargaining chip.
The trade deal, announced by Trump on July 23, includes tariffs on Japanese cars set at 15 percent -- lower than the 27.5 percent that was to have been levied -- in exchange for $550 billion of Japanese investment in the United States.
During the course of the negotiations, which spanned around three months from mid-April, Japan identified Lutnick as the only person who could communicate "directly and on a deep level" with Trump due to their close friendship of over 30 years, and directed its efforts on him, according to one of the sources.
Ryosei Akazawa, Japan's chief tariff negotiator, built trust with Lutnick not only through in-person talks but also through dozens of phone calls, the source said.
Believing that Lutnick placed a high priority on economic security amid China concerns, Japan emphasized its willingness to contribute to strengthening U.S. domestic supply chains and eventually reached an understanding with him.
Trump, however, maintained a hardline stance even in late June, venting frustration that Japan does not import significant amounts of American cars and rice.
"I'm not sure we're going to make a deal. I doubt it," he had said, while demanding additional concessions in exchange for lowering tariffs.
The tide turned on July 22 immediately following Japan's upper house election. A sudden meeting was arranged for the following day between Trump and Akazawa, who was in Washington for an eighth round of talks.
Akazawa and Lutnick began to "rehearse" in preparation for the talks, with Lutnick suggesting that a total investment of $400 billion be proposed in the expectation that Trump would ask for $500 billion. A board was prepared by U.S. officials to clearly show Trump how much Japan would investment.
But Trump demanded even more, leaving Akazawa no choice but to agree to $550 billion.
A senior official of the prime minister's office acknowledged that the deal does not align with World Trade Organization rules or the Japan-U.S. trade agreement that took effect in January 2020, but also conceded that Trump "is a president who genuinely believes in protecting his country through tariffs."
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