Negotiations have stalled ahead of next week’s deadline, with some suggesting Japan misjudged the depth of President Trump’s frustration over Tokyo’s policies.

Japanese carmakers have largely absorbed the cost of US President Donald Trump’s tariffs on auto imports, a move that may undermine the Asian nation’s negotiating power ahead of a July 9 deadline that will see duties rocket even higher.

There is a goods trade deficit with Japan because the U.S. imports more than it exports, which Trump views as a sign of unfairness in the trading arrangements. In 2024, federal trade data shows the U.S. goods trade deficit with Japan was $68.5 billion.