The recently celebrated US-Japan trade agreement has drawn headlines for being a major “win” in bilateral economic relations — particularly from former President Donald Trump, who has touted the deal as a straightforward success for American farmers and industries. However, beneath the surface of political optimism and public declarations lies a far more nuanced picture. Experts and stakeholders on both sides of the Pacific suggest that the commerce pact is more symbolic than substantial — and far from the comprehensive agreement many were expecting.
A Limited-Scope Agreement, Not a Full Trade Deal
At the heart of the skepticism is the nature of the agreement itself. The deal signed between the United States and Japan is not a full free trade agreement (FTA), but rather a limited bilateral trade pact. It primarily covers tariffs on agricultural products, some industrial goods, and provisions related to digital trade. Notably, it bypasses other critical sectors such as automotive tariffs, services, and dispute resolution mechanisms — areas that would normally form the backbone of a comprehensive FTA.
For all the celebration, the agreement falls short of what the Trans-Pacific Partnership (TPP) — a multilateral trade pact that Trump withdrew from in 2017 — would have achieved for both countries. Japan has since remained in the updated TPP, known as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), while the U.S. has watched from the sidelines.
Agricultural Gains with asterisks
From the U.S. perspective, one of the most highly publicized benefits has been improved access for American agricultural exports to Japan. The deal reduces or eliminates tariffs on U.S. beef, pork, wheat, cheese, wine, and other farm products. Trump highlighted these as crucial victories for U.S. farmers who have been affected by trade tensions with China and the fallout from withdrawing from the TPP.
However, critics note that many of these benefits merely restore U.S. competitiveness in Japan’s market to the levels enjoyed by TPP member countries. In essence, American farmers are being brought up to par — not gaining a unique edge. Additionally, some tariff reductions will be phased in over time, limiting short-term gains.
Moreover, the agreement does not address non-tariff barriers or Japanese subsidies that can hinder U.S. exports. Nor does it contain the enforcement mechanisms that would ensure Japan upholds its promises in the long term. In trade negotiations, enforcement is as important as the deal itself — and in this case, it’s notably absent.
The Auto Industry: A Glaring Omission
Perhaps the most significant gap in the US-Japan deal is the automotive sector — a recurring source of trade imbalance and political tension. Japan’s auto exports to the U.S. remain robust, while American automakers struggle to penetrate the Japanese market due to a combination of consumer preferences, regulatory hurdles, and dealership structures.
The Trump administration has long cited autos as a core issue in U.S.-Japan trade talks, with threats to impose tariffs on Japanese cars if progress wasn’t made. Yet, the final agreement contains no new provisions to boost U.S. auto exports or address longstanding market barriers in Japan. Instead, both sides agreed to continue negotiating a more comprehensive deal in the future — a vague and open-ended commitment that provides little immediate value.
Digital Trade: A Bright Spot with Caveats
On the positive side, the agreement does include strong provisions on digital trade, modeled after the U.S.-Mexico-Canada Agreement (USMCA). These rules promote data privacy, cross-border data flows, and a ban on data localization requirements — key areas for U.S. tech companies operating in Japan.
Still, some analysts argue that these digital rules, while modern and favorable, serve more as a baseline for 21st-century trade agreements than as game-changing wins. Moreover, critics suggest that the digital trade chapter does not go far enough in addressing emerging concerns like artificial intelligence governance or cybersecurity cooperation.
A Politically Motivated Deal?
Many observers believe that the limited scope of the deal reflects political expediency more than a genuine economic breakthrough. The agreement allowed Trump to claim a foreign policy victory and rally support among agricultural communities ahead of election cycles. Likewise, for Japan’s Prime Minister at the time, Shinzo Abe, the deal provided a way to maintain strong U.S.-Japan ties without committing to a full-scale FTA that might trigger domestic resistance.
Trade experts have noted that the use of “executive agreements” to push through such deals — bypassing Congressional approval — limits transparency and long-term durability. If a future administration deems the deal insufficient or lopsided, there may be little recourse to sustain its terms.
What Comes Next?
Both sides have stated their intentions to pursue additional negotiations to address unresolved issues, including those related to the automotive sector and services trade. However, these discussions have no set timeline or concrete framework, leaving businesses and investors in a state of uncertainty.
Japan has signaled reluctance to enter into another round of sweeping trade liberalization talks unless there is a clear benefit. Meanwhile, U.S. priorities may shift depending on the political landscape, economic conditions, and global events.
Without firm deadlines and enforceable commitments, the next phase of talks could stretch for months or even years — or fade altogether depending on broader geopolitical shifts.
Conclusion: A Step Forward, But Not a Leap
The US-Japan commerce deal may be a diplomatic step forward, but it is far from the bold, comprehensive trade overhaul that its champions portray. It reclaims some of the ground lost when the U.S. exited the TPP, yet leaves significant gaps in core sectors like automobiles and enforcement mechanisms.
For U.S. farmers, the agreement provides welcome relief — but not a revolution. For tech firms, the digital trade provisions are modern but modest. And for manufacturers, especially in the automotive sector, the deal offers little to celebrate.
As with many politically driven deals, the rhetoric outpaces the reality. To achieve lasting and meaningful progress in U.S.-Japan trade relations, future negotiations will need to go deeper, broader, and more transparently — with enforceable rules and mutual accountability. Until then, this agreement should be seen as a partial fix, not a finished solution.
