Japan

Intelligence for Better Decision Making

Japan-US Auto Tariff Talks Intensify Amid Disputes Over Trade Terms and Market Access
May 12, 2025 | Indirect Indicator

Japan and the United States are negotiating automobile tariffs that carry significant implications for both economies.

**Japanese officials have objected to a US-U.K. deal that cuts US duties on British vehicle imports from 27.5% to 10% for up to 100,000 units annually.**
They argue that Britain’s modest export volume—roughly matching the quota—sets an inadequate precedent for Japan, which last year sent about 20% of its vehicle output by volume and 30% by value to the US market. Tokyo insists on the outright elimination of the existing 25% auto tariff rather than accepting a reduced rate.

**Prime Minister Shigeru Ishiba conceded that the U.K. agreement’s 10% rate could serve as a reference point, but he stressed that Japan’s negotiations with Washington must aim for full duty removal.**
He pointed out that Japanese automakers have made substantial investments and created jobs in the United States, a relationship that differs materially from the U.K. arrangement. Ishiba warned that maintaining tariffs could restrict future Japanese investment in the US market.

**Beyond tariffs, Japan is pressing US counterparts on non-tariff barriers, particularly concerns over Japanese vehicle safety standards.**
Ishiba has asserted that any backtracking on safety regulations would compromise governance and citizen protection. Economic Revitalization Minister Akazawa Akimasa supports scrapping automotive tariffs in tandem with other levies to ensure comprehensive relief for Japanese exporters.

**Tokyo has set an internal goal to wrap up tariff discussions before announcing the Upper House election date, expected in early July, noting that temporary suspensions of reciprocal US tariffs expire on July 9.**
Ishiba said he will press on until both automotive and agricultural interests are fully addressed, underscoring that talks will continue as long as Japan’s national interests remain at stake.

**While ruling out concessions that would harm domestic farmers, Ishiba signaled possible flexibility on rice policy—such as boosting imports of US rice or corn for bioethanol—subject to a thorough review of Japan’s supply needs.**
He also pointed to US investigations into extra duties on imported aircraft and parts, reminding counterparts that a significant share of components for jets such as the Boeing 787 originates in Japan.
US-Brokered Ceasefire Halts Escalating India-Pakistan Conflict
May 12, 2025 | Indirect Indicator

Cross-border hostilities between India and Pakistan escalated rapidly in early May before a US-mediated agreement established a ceasefire.


India opened the exchange on May 7 with strikes on Pakistani targets, prompting Pakistan’s military to counterattack Indian bases after an Indian missile hit a Pakistani air force installation. Over the following days both sides launched missiles and drones at urban areas, stoking fears of all-out war. US and Chinese officials urged restraint, and Pakistan’s deputy prime minister declared that Islamabad would suspend military actions if New Delhi did the same—a position echoed by India’s air force commander.

**On May 10, US President Donald Trump announced that intensive overnight talks had produced a full, immediate ceasefire.**
Both governments agreed to halt all firing and military operations by land, air and sea from 5 p.m. local time. US Secretary of State Marco Rubio brokered the deal, India’s foreign ministry confirmed it at a news conference, and Pakistan’s foreign minister, Ishaq Dar, announced it on social media.

**Despite the truce, forces on both sides—especially in the disputed Kashmir region—remain on high alert.**
Military and diplomatic representatives have set further meetings for May 12 to establish mechanisms for implementation and verification of the ceasefire.

**Almost immediately, India accused Pakistan of breaching the agreement, which Pakistan’s government denied.**
China, Saudi Arabia and the G7 continue to call for diplomatic engagement and worry that without sustained dialogue, renewed hostilities could erupt.

Monitored Intelligence for Japan - May 12, 2025


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Erudite Risk takes an all risks approach to intelligence reporting. We categorize key intelligence into one of 40 different risk intelligence categories.

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法定耐用年数20年超、把握できた経年劣化 水道老朽化ワースト大阪で進まぬ交換作業

Statutory service life exceeds 20 years, deterioration confirmed; replacement work slow in Osaka, worst-case scenario for aging water pipes

The Sankei News | Local Language | News | May 12, 2025 | Critical Infrastructure Failure

A significant water pipe burst occurred in Joto Ward, Osaka, leading to flooding in residential roads. The broken pipe, made of ductile cast iron and installed about 60 years ago, has deteriorated over time, likely exacerbated by a moist soil environment. Osaka City has recorded the highest rate of water pipe deterioration among designated cities in Japan, highlighting an urgent need for replacement efforts.

The ruptured pipe exceeded its "legal useful life" of 40 years, based on depreciation schedules, and approached the city's "usable life" limit of 65 years. Classified as "non-earthquake-resistant," the condition of the aging infrastructure is a cause for concern, particularly given that around 52% of the city's 5,221 kilometers of water pipes have surpassed their legal service life. Approximately 100 water leakage incidents occur annually, prompting the city to prioritize replacing brittle cast iron pipes with more durable materials.

Nationwide, similar issues arise with aging water and sewage systems, necessitating urgent upgrades. Recent incidents, including a road collapse in Saitama and another water pipe failure in Kyoto, underscore the critical state of infrastructure across Japan. Osaka City Mayor Hideyuki Yokoyama has called for collaboration with the private sector to prioritize inspections and updates of essential infrastructure components to address these persistent problems.

Nippon Steel expects FY 2025 net profit to sink 43% on tariff woes

The Mainichi | English | News | May 12, 2025 | UndeterminedTrade Issues and Numbers

Nippon Steel Corp. has projected a significant decline in its net profit for fiscal 2025, anticipating a drop of 42.9% to 200 billion yen ($1.38 billion). This expectation stems from ongoing uncertainties regarding tariffs imposed by the United States. The company also reported that its net profit for fiscal 2024, which concluded in March, fell by 36.2% to 350.23 billion yen, impacted by inflation and a slowdown in the Chinese economy.

During a press conference, President Tadashi Imai expressed skepticism about any improvement in business conditions in the current fiscal year and highlighted the unpredictable nature of U.S. tariffs, which can fluctuate frequently. The tariffs had been increased by President Trump, who enacted a 25% levy on steel and aluminum imports. Despite Japan's calls for the complete removal of these tariffs, the U.S. government has denied these requests.

Imai also addressed the company's plans to acquire U.S. Steel Corp., stating that negotiations with the U.S. government were ongoing but that no specific details could be shared. The U.S. government has set a tight timeline for decision-making regarding this acquisition, with a recommendation due by June 5. Historically, there have been complications related to this deal, including national security concerns raised by a former U.S. President that resulted in legal action from both companies. For the just-ended fiscal year, Nippon Steel reported a 29.6% decline in operating profit, with total sales decreasing by 1.9% to 8.70 trillion yen.

Myanmar's military chief has first meeting with China's leader since 2021 coup

NHK | English | News | May 12, 2025 | Geopolitical Conflict and Disputes

Myanmar's military leader Min Aung Hlaing met with China's President Xi Jinping for the first time since the 2021 coup. This meeting occurred during Hlaing's visit to Moscow, where he discussed various cooperative initiatives between Myanmar and China.

Hlaing expressed gratitude for China's support following a major earthquake in March, which affected central areas of Myanmar. Both leaders reaffirmed their commitment to strengthen cooperation in sectors such as the economy, trade, and energy.

China's foreign ministry indicated that Xi pledged ongoing support for Myanmar's reconstruction efforts. Additionally, he emphasized the importance of promoting key projects, particularly in transportation infrastructure, as part of China's Belt and Road initiative, aimed at creating an extensive economic zone. Myanmar is likely seeking to reinforce its ties with China to enhance political stability and counteract feelings of isolation resulting from Western sanctions.

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