As usual, details are vague regarding the deal, which leads to the following questions:
- It seems reasonably clear that Trump has won better terms for American cars and agricultural products in Japan. That is a traditional goal in trade negotiations, and the result is welcome. But what, exactly, are the terms of that access, and will it be enough to matter? Will the Japanese actually buy American cars and rice if given the opportunity, or will they continue to prefer domestic products? We won’t know the answers to those questions, in all likelihood, for years to come.
- Trump undoubtedly views the 15 percent tariff on Japanese goods as a victory because tariffs are, in his eyes, desirable in and of themselves. If your tariff is higher than someone else’s, you “won.” But the tariff will be a tax on American importers. Who will actually pay it? Will it result in higher prices, lower profits, or both? Thus far, the new tariffs have mostly been eaten by businesses, but that could change at any moment, and probably will.
- We are told that “Japan” will be investing $550 billion in the American economy, at the discretion of Donald Trump. Who, exactly, in Japan will be writing these checks, and when? What limits are being put on Trump’s ability to direct the investments? What are the legal consequences if the investments are not made?
It is the last series of questions that create the most heartburn. At first glance, this looks like the creation of a huge sovereign wealth fund, to be spent totally at Trump’s discretion, with no oversight from Congress. The implications of that, given Trump’s character and motivations, are too obvious and frightening to merit further discussion at this time.