According to the Wall Street Journal (WSJ), as President Trump announced a 25% tariff on Japanese goods to take effect on August 1, the Japanese government has stated it will not easily relent, committing to ongoing negotiations with the U.S. to defend its national interests. Prime Minister Shigeru Ishiba and several cabinet officials expressed on the 8th that they will not accept unfair conditions and aim for a trade agreement that both sides can accept. Ishiba stated, "The Japanese government will not make rash concessions. We will firmly guard our interests and present appropriate claims while fully engaging in negotiations."

He also noted that Japan will make good use of the extended negotiation period until early August to continue discussions with the U.S., striving for a result beneficial to both parties.

However, the auto tariffs present the biggest obstacle. Despite establishing a level of mutual trust in past negotiations, several critical issues remain unresolved, particularly regarding the U.S. taxation policy on Japanese automobiles. Japan’s Minister of Economy and chief negotiator Ryosei Akazawa revealed he spoke for 40 minutes with U.S. Secretary of Commerce Howard Lutnick, discussing topics including trade expansion, non-tariff barriers, and economic security, but auto tariffs remain a sticky point. Akazawa emphasized, "The automotive industry is Japan's core industry, and if we cannot reach an agreement on auto tax rates, we cannot sign a comprehensive trade agreement."

Automobiles account for about 30% of Japan's exports to the U.S., affecting employment and industrial vitality, hence Japan insists on not conceding. According to a document published by Trump on Truth Social, the U.S. emphasized that the 25% tariff rate is still below the level required to offset the U.S.-Japan trade deficit and stated that if Japan or Japanese companies are willing to adjust their trading behavior, the rate may be lowered in the future. Additionally, the U.S. clarified that "reciprocal tariffs" would not overlap with existing specific tariffs (such as those on automobiles and steel and aluminum).

Japan remains cautious about economic impacts, with the Treasury Minister promising assistance to affected industries. Japanese Finance Minister Katsunobu Kato stated that he would continue to monitor the economic effects of U.S. tariffs and provide financial assistance as necessary to ensure the smooth operation of affected enterprises. He also indicated that Japan would not purchase U.S. products that do not meet domestic standards and benefits, reflecting a commitment to maintaining domestic market principles.

Analysts at BMI (a division of Fitch Solutions) noted that if negotiations ultimately fail to achieve a significant reduction in auto tariffs, Japan may not sign the agreement. This suggests negotiations may remain stalled, making it difficult for investors and companies to foresee future tax burdens. Recently, Trump has exerted pressure on Japan, accusing Tokyo of not purchasing enough U.S. rice and claiming unfair trade conditions for automobiles, even threatening that future tax rates could rise to 30%-35%. However, Japanese officials have consistently emphasized, "We will not concede on national interests that cannot be compromised."