In this episode, the Trade Guys cover a lot of ground. Japan is following EU’s playbook by agreeing to bilateral trade talks with the United States. Trade tensions with China may begin to spill over into other areas of bilateral tension. The trade deficit widens, and the NFL scores an USMCA win.

What We’re Reading

“Japan’s Embrace of Bilateral Trade Talks With U.S. Spares It From Tariffs”

The New York Times

“When Japan agreed to enter into bilateral trade talks with the United States during meetings at the United Nations General Assembly on Wednesday, the country’s prime minister, Shinzo Abe, appeared to have finally said ‘yes’ after two years of saying ’no.’”

“Japan has consistently insisted it was not interested in entering into bilateral trade negotiations with the United States. Instead, it has repeatedly invited the United States to re-enter a broad trade pact among 11 countries from which President Trump withdrew during his first week in office.”

“Yet by agreeing to open the talks, Japan received a reprieve from the looming auto tariffs as long as the talks continue. And American officials also accepted Japan’s insistence that it would not go any further than its previous commitments in the multilateral trade deal — known as the Trans-Pacific Partnership — to open up its markets for agricultural and forestry imports from the United States.”

“Some analysts suggested Japan had effectively performed a bit of diplomatic jiu-jitsu, giving the appearance of compromising while wrangling concessions from the United States.”

Why it matters: After rejecting the Trump administration’s overtures to negotiate a bilateral agreement in hopes of the U.S. rejoining TPP, Japan has finally agreed to begin one-on-one talks. But Japan came away with a big win in agreeing to start negotiations: amnesty from potential U.S. tariffs on automobiles. This arrangement is very similar to the agreement struck by the Trump administration and European Union about a month ago.

Key questions: Who is the winner in this development: the U.S. for finally convincing Japan to start trade negotiations or Japan for getting out of potential auto tariffs? Could bilateral negotiations actually lead to an ambitious bilateral FTA or is Japan merely stalling? What does each country seek to gain through a trade deal?

“U.S. Trade Gap Hits Six-Month High as Soybean Exports Plunge 28%”


“The U.S. trade deficit widened in August to the biggest in six months as soybean exports plunged and a measure of the gap with China hit a record, showing how the Trump administration’s trade war is dragging on economic growth.”

“The gap in goods and services trade increased 6.4 percent to $53.2 billion, from a revised $50 billion in the prior month, Commerce Department data showed Friday. Imports rose 0.6 percent and exports fell 0.8 percent. Soybean exports dropped $1 billion, or 28 percent, to $2.58 billion, reversing a run-up earlier this year ahead of retaliatory levies from China.”

“A widening trade deficit is set to drag on the economy in the third quarter after a narrower gap helped boost the pace of expansion in the prior period to the fastest since 2014. The latest figures show how President Donald Trump’s tariffs on goods from China and other nations, which have raised prices and disrupted some businesses, are starting to weigh on an otherwise solid pace of U.S. growth.”

“Exports fell to $209.4 billion, spanning declines in other items including crude oil and petroleum products. Imports rose to $262.7 billion, boosted by consumer goods and automobiles.”

Why it matters: Even with all the Trump administration’s tariffs, the U.S. trade deficit with China and the world continues to grow. In August, exports fell, and imports grew despite the tariffs.

Key question: How can the expansion of imports and decline of exports be explained when President Trump continues to raise tariffs?

“Trump Says NFL’s Goodell Thanked Him for Deal on Canadian Ads”


“President Donald Trump said that NFL Commissioner Roger Goodell called to thank him for a provision of a trade deal with Canada that resolves a dispute over the football league’s Superbowl ads.”

“’I heard that the NFL had a problem with Canada on their advertising. A big, big problem,’ Trump said at a campaign rally in Rochester, Minnesota, on Thursday night. ‘I said, we’ve got to fix the NFL. It took me two minutes. And now our country will be taking tens of millions of dollars more money.’”

Why it matters: Settling a somewhat humorous dispute, but one taken very seriously by the NFL, USMCA requires that Canadian broadcasters can no longer air the Super Bowl in Canada with U.S. ads. NFL Commissioner Roger Goodell apparently called President Trump to thank him for the fix. The NFL has been concerned that the inability to show Canadian ads during the broadcast in Canada could hurt the value of the broadcast rights to the big game up north.

Key questions: Are there any other little wins or resolutions to small but intriguing disputes buried in USMCA?