EU and Japan prepare delicate balancing act with US

Published on 23/07/2025 - 6:30 GMT+2

The EU and Japan are set to underline the virtues of a rules-based economic order when they meet in Tokyo for summit on Wednesday, but the backdrop of tense trade relations with the US is hovering over the shoulders on both sides.

The 30th EU–Japan summit comes at a delicate time, as both powers are entangled in tariff disputes with the US. Japan and the EU are already facing 50% US tariffs on their steel and aluminium exports, 25% on cars, and 10% on all other exports.

"We share some fundamental principles, such as the need to maintain a predictable and free economic order," a senior EU official said ahead of the summit.

During the summit, Commission President Ursula von der Leyen and Japanese Prime Minister Shigeru Ishiba will compare notes on the US measures.

The summit comes at a tricky moment for both as they are in the midst of negotiations with the US and are eager to avoid any escalation at all costs.

Like the EU, Tokyo maintains a significant trade surplus with the US, $68.4 billion (€58,44 billion), while the EU's surplus with the US stands at €50 billion.

If both fail to reach a deal with the Trump administration by 1 August, the US is threatening to raise tariffs to 25% on Japanese imports and up to 30% on those from the EU.

“The US is and will be the most important ally for Japan,” a Japanese official told Euronews.

The EU and Japan don’t share the same approach to negotiation with the US, however. While the EU is preparing countermeasures (two packages of €21 and €72 billion each), Japan is not planning any retaliation, even if the same Japanese official said that “all option remains on the table”.

“Japan and the EU have different approaches because they have different market structures and different economies,” the official explained.

However insiders from both sides agree that their businesses need predictability.

“The success of the summit will depend on whether the EU and Japan can demonstrate their firm alignment in pursuing the rule-based global trade system in the face of Trump administration policy,” Hibiki Kimura, from the Japanese law firm Nishimura & Asahi, told Euronews, adding: “Both the EU and Japan need to provide businesses with predictability, but fluctuating tariff plans have introduced the risk of global value chain disruption.”