Japan vs. America: The Battle of "Rice and Cars" - The 35% Tariff Exposes Weaknesses in the Supply Chain

【Prologue】“Deal? Doubt it.”

――This single remark by U.S. President Donald Trump aboard Air Force One dramatically shifted the atmosphere of U.S.-Japan trade negotiations. On July 1, 2025 (Eastern Time), Trump told reporters, "A comprehensive agreement with Japan is almost unlikely. In some cases, we may impose additional tariffs of 30% or even 35%." With the deadline for implementation (July 9) approaching, his statement shook Tokyo and Washington, and social media buzzed with related keywords.

【Chapter 1: The Background of the Statement ── The True Intent of the "Spoiled Child"】

"Japan has freeloaded on the U.S. market for years, becoming a 'spoiled child' at our expense." Trump emphasized the imbalance in agricultural products and automobiles, demanding market access for U.S. rice. His domestic political calculations aimed at appealing to his support base of Midwestern farmers and auto workers were evident.infomoney.com.brtimesofindia.indiatimes.com.

【Chapter 2: Three Axes of Conflict】

1. Agricultural Products――The U.S. demands the abolition of minimum access quotas vs. Japan advocating for domestic rice cultivation protection.

2. Automobiles――The U.S. uses EV rules of origin and a permanent 25% tariff as leverage vs. Japan seeking tariff elimination and research cooperation.

3. Currency――The U.S. suspects yen depreciation vs. Japan wanting to protect its monetary policy freedom.

Negotiations have repeatedly broken down even after seven ministerial meetings.

【Chapter 3: Market Shock】

Within 12 hours of the statement, the dollar-yen rate moved from 149 to 152, and Nikkei futures fell by 900 points. CME long grain rice rose by 4.5%. Oxford Economics estimated a 12% increase in automobile production costs due to supply chain reorganization.

【Chapter 4: Tug-of-War in U.S. Domestic Politics】

Conservative Republicans cheered, while moderate Republicans and the auto industry opposed. Democrats criticized, saying, "A tariff war with allies is a foolish policy."

【Chapter 5: Japan's Disquiet】

Prime Minister Ishiba held an emergency press conference and decided to dispatch a special envoy. Keidanren warned, "A 35% tariff would collapse the supply chain." JA Zenchu opposed expanding U.S. imports.

【Chapter 6: SNS Buzz】

• @CableFxMacro "Pressure linked to Fed chair appointment"twitter.com

• @MacroGuru9 "Increasing long dollar positions"x.com

• @taiyo_chukou "Zero results from Ishiba's seven visits to the U.S.?"twitter.com and others
  1.46 million posts in 24 hours, sentiment analysis showed 35% anger and 28% anxiety.

【Chapter 7: Expert Diagnosis】

• Professor Sayuri Ito "Limited concessions on agricultural products + postponement on automobiles is the compromise point"

• Michael Green "If security cooperation is undermined, China will aim to drive a wedge between the U.S. and Japan"

• Professor Daniela Russ "High tariffs will raise U.S. inflation by 0.3 points and delay Fed rate cuts"

【Chapter 8: Historical Perspective】

The highest tariff risk since the 1930 Smoot-Hawley Act (average 45%). Is a Plaza Accord-type compromise possible in 1985?

【Chapter 9: Three Scenarios】

1. Partial Agreement 40%: Expansion of rice import quotas, freeze on automobile tariffs.

2. Tariff Implementation 35%: Japan GDP ▲0.6%, U.S. CPI +0.3%.

3. Long-term Conflict 25%: World GDP ▲0.4pt, supply chains shift to ASEAN and Mexico.

【Chapter 10: Timeline】

7/5 Ministerial Talks→7/9 Implementation Deadline→7/15 U.S. Congressional Bill→August Japan Retaliation→September G20 Niigata… Details omitted thereafter.

【Epilogue】

Protectionism was not a relic of history. The figure of 35% reflects power politics and the complexities of the supply chain. The limited negotiation time left indicates——the art of negotiation or the tragedy of collision.