synopsis

Katsunobu Kato, a member of parliament, is set to meet U.S. Treasury Secretary Scott Bessent this week in Washington, with the second round of trade talks set to follow later this month.

A former Japanese minister said President Donald Trump's administration must correct several misunderstandings regarding U.S.-Japanese ties.

In an interview with Bloomberg on Wednesday, former Japanese Foreign Minister and Digital Transformation Minister Kono Taro said, "President Trump could flip according to how the market reacts to it and what he's quoting; the facts, numbers, are quite wrong."

"So we need to first correct his misunderstanding to put our proposal on the table."

Kono, a member of the Japanese Parliament, pointed to Trump's incorrect views regarding the U.S.-Japan security alliance and the Japanese auto industry during his previous term and how the incorrect assumptions were rectified following his Washington visit with then-Prime Minister Shinzo Abe. 

He called for similar rectification this time around.

Kono said, "We definitely need to finish this negotiation, but we shouldn't rush in."

After a first round of discussions held last week, which, despite being cordial, did not mark much progress, Japanese Finance Minister Katsunobu Kato is set to meet U.S. Treasury Secretary Scott Bessent this week in Washington. 

The two sides will reportedly discuss the yen's exchange rate, given the U.S. opinion that the Japanese currency is kept artificially low. 

The Bloomberg report said the second round of high-level trade talks between the countries will be held later this month.

After announcing a 24% tariff on Japanese imports, the U.S. has paused implementation to allow scope for negotiations. Currently, a 10% base levy and a 25% tariff on car, steel and aluminum are in place.

Kono said Japan should tread cautiously and avoid discussing regional security issues and its relationship with China as part of the bilateral talks with China. 

Japan's Prime Minister Shigeru Ishiba has reportedly sent a letter to Chinese President Xi Jinping to sidestep the escalating trade war between China and the U.S.

The iShares MSCI Japan ETF (EWJ), an exchange-traded fund that tracks the investment results of an index composed of Japanese equities, ended Tuesday up 1.99% at $69.27.

The EWJ ETF has gained 3.2% for the year-to-date period,  the SPY, QQQ, and DIA are now down over 9.8%, 13%, and 7.5%, respectively.

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