U.S.-Japan Trade Talks: No Currency Targets

By David Lawder and Leika Kihara

WASHINGTON (Reuters) – The U.S. does not have specific currency targets in mind as part of bilateral trade talks with Japan, Treasury Secretary Scott Bessent said on Wednesday, ahead of an expected meeting with Japanese Finance Minister Katsunobu Kato this week.

The dollar-yen exchange rate is likely to be among the key topics discussed at that meeting.

Bessent stated that the U.S. is considering multiple factors including “tariffs, non-tariff trade barriers, currency manipulation and government subsidy of labor and fixed capital investment” in its negotiations with Japan.

> “We’d expect the Japanese to honor the G7 agreement,” he told reporters on the sidelines of the International Monetary Fund and World Bank spring meetings in Washington.

> “No currency targets,” Bessent said when asked whether the U.S. would discuss any currency targets with Japan as part of the bilateral trade negotiations.

Japan last week initiated bilateral trade talks with the U.S. to seek concessions on tariffs, including those on automobiles, which are central to Japan’s export-focused economy.

Both countries have agreed to have their finance chiefs discuss the complex issue of currency rates. This has sparked speculation about what Bessent and Kato will address in their initial face-to-face discussions during the IMF and World Bank meetings.

U.S. President Donald Trump’s emphasis on addressing a significant trade deficit and previous remarks criticizing Japan for intentionally maintaining a weak yen have led to market expectations that Japan will face pressure to strengthen the yen’s value against the dollar, thereby providing U.S. manufacturers with a competitive edge.

These expectations have contributed to the yen’s recent rise to seven-month highs against the dollar.

However, sources have indicated that Japan sees little room for direct actions, such as currency intervention or an immediate interest rate increase by its central bank.

Trump has imposed 24% tariffs on Japanese exports to the U.S. Although most of these tariffs have been paused until early July, a 10% universal rate remains, along with a 25% duty on cars that analysts believe will significantly impact Japan’s economy.