Trump’s Tariff 'Wins' Are America’s Losses: The Japan Deal’s Hidden Costs

The recent trade deal with Japan, touted as a "massive" victory by President Trump and amplified by economic boosters like Steve Moore, Larry Kudlow, and Treasury Secretary Scott Bessent, is being sold as a triumph for American interests. However, this 15% tariff on Japanese imports, negotiated down from a threatened 25%, is far from a win for the U.S. economy. Tariffs are taxes paid by American importers, not foreign exporters, meaning U.S. manufacturers and consumers bear the burden. Higher input prices for critical components like auto parts, which make up over a quarter of Japan’s exports to the U.S., will ripple through supply chains, inflating costs for American businesses and driving up prices for consumers. While the deal may push Japan to open its markets to U.S. goods like rice and cars (which benefits Japanese consumers and businesses rather than the U.S.), the immediate reality is clear: Americans will pay more.

The narrative of “winning” through these trade deals, as pushed by Kudlow and Bessent, rests on the flawed premise that bullying trading partners into accepting higher tariffs strengthens America’s position. This is just plain wrong. Higher tariffs, even if reduced from initial threats, shrink trade volumes, as Japan will certainly sell fewer goods to the U.S. because rising costs will reduce the capacity to buy those goods. Alternatively, Americans won't buy those goods at all because, at the higher costs, Japan will sell those goods to different markets. This isn’t just bad for Japan—it hurts American manufacturers who depend on Japanese inputs like semiconductors and auto components, now pricier due to tariffs. Companies like General Motors, Stellantis, and Tesla have already reported profit losses in the billions from tariff impacts, signaling that U.S. industries are far from immune. The notion that tariffs protect American jobs ignores how they disrupt supply chains and raise costs, potentially forcing companies to cut jobs or pass expenses to consumers.

The enthusiasm from Moore, Kudlow, and Bessent obscures a deeper economic misstep. The Japan deal, with its $550 billion investment promise, sounds impressive but is largely hollow—it’s not new money. Japan would have invested in the U.S. anyway, as it only earned the dollars needed for such investments by selling goods to the U.S. (which created the trade surplus with the U.S. in the first place). Worse, Trump’s push to direct where Japan invests reeks of industrial policy, forcing investments into less efficient channels than the market would naturally select. This meddling reduces economic benefits, as Japan’s investments would otherwise flow to optimal opportunities. If Japan must generate new dollars to meet these commitments, it could widen the U.S. trade deficit, contradicting the deal’s supposed goals. Far from “leveling the playing field,” as Bessent claims, these tariffs risk isolating the U.S. economy, straining alliances, and fueling inflation that could push core rates above 4% by mid-2026, as some economists warn. This isn’t winning—it’s a lose-lose disguised as a victory lap.