• The US and Japan are nearing an interim trade agreement, although major issues remain unresolved.
• President Trump has postponed several tariffs while pushing for discussions on currency and trade imbalances.
• China is reportedly seeking to convince Japan to unite against US tariffs, complicating Japan's strategic positioning.
• The Japanese economy is highly dependent on both US and Chinese markets, facing challenges from tariffs and trade tensions.

The United States and Japan are making progress toward an interim trade agreement, although many significant issues will be deferred. A person familiar with the talks indicated that "it was still possible that no final deal could be reached," reflecting ongoing complexities in the trade relationship, according to Channel News Asia and Reuters.

During recent negotiations, President Trump highlighted "big progress" after meeting with Japanese officials, which included discussions led by Japan's chief trade negotiator Ryosei Akazawa on non-tariff barriers and the sensitive issue of exchange rates. Finance Minister Katsunobu Kato also plans to meet U.S. Treasury Secretary Scott Bessent for discussions surrounding currency, according to New York Times and Newsweek.

Amid this backdrop, China has suggested a collaboration with Japan to counteract US tariffs, calling for unity against protectionist policies. However, analysts believe this proposal is unlikely to gain traction, as Japan's strategic interests favor alignment with the US over economic cooperation with China. Ryo Hinata-Yamaguchi, a professor from Tokyo International University, stated, “There is no way that Japan could team up with … China in this trade dispute with the US,” indicating strong ties to Washington, according to South China Morning Post and Newsweek.

Japan finds itself in a precarious position, heavily reliant on both US and Chinese markets for exports, particularly automobiles and electronics. As Trump continues to impose and pause various tariffs, including a 24% levy on Japanese goods, the potential for economic crisis looms if negotiations falter. Japan's careful navigation between supporting US trade initiatives while managing economic ties with China reflects its historical balancing act, as noted by New York Times.