Defense Purchases, Investments Represent ‘Strategic Realignment’

A new trade agreement with Japan was announced by the Trump administration under which Japan has committed to purchase 100 Boeing aircraft as well as increase its annual expenditures on U.S. defense equipment. Details of the Boeing purchase have not yet been released, but it is part of a broader range of economic steps Japan and the U.S. agreed upon.

A statement released by the White House said the agreement “breakthrough openings across key sectors.” In manufacturing and aerospace, Japan has committed to, among other things, purchase US-made commercial aircraft, which includes a deal for 100 Boeing aircraft along with a significant increase in defense equipment purchases.

The total value of the trade deal was announced to be an investment by Japan of $550 billion in U.S. core industries, from which the U.S. will retain 90% of the profits.

The statement read, “This is the single largest foreign investment commitment ever secured by any country and will generate hundreds of thousands of US jobs, expand domestic manufacturing, and secure American prosperity for generations.”

The agreement provides for the U.S. to charge a tariff of just 15% on imported Japanese goods, lower than the 25% applied to other countries.

Shigeru Ishiba, Prime Minister of Japan said the tariff negotiations were a key element of the agreement between the two countries, noting that the talks enabled him to keep the tariff rate at 15%.

Ishiba said in an interview, “We have been working to reach an agreement that is consistent with the national interests of both Japan and the United States while protecting what needs to be protected. This is the result of our consistent advocacy and lobbying the US for investment rather than tariffs.”

The White House ended its statement by saying “this agreement is not merely a trade deal” but rather a “strategic realignment of the US-Japan economic relationship.”

FMI:  www.state.gov/