President Donald Trump’s recent announcement of tariffs on steel and aluminum has sparked a flurry of diplomatic activity among the United States’ closest allies in the Asia-Pacific region. Despite Trump’s initial insistence that there would be “no exemptions, no exceptions,” countries like Japan, South Korea, and Australia are hopeful they can persuade the unpredictable U.S. leader to grant them exceptions. These nations, which rely heavily on exports, are acutely aware of the potential economic fallout from the tariffs and are employing a mix of lobbying, strategic arguments, and diplomatic efforts to sway Trump’s decision. While the outcome remains uncertain, the situation underscores the challenges of dealing with a U.S. administration known for its impulsive and often contradictory approach to trade policy.
Japan, in particular, has been at the forefront of efforts to negotiate exemptions. Prime Minister Shigeru Ishiba, who met with Trump in Washington last week, has emphasized the need for Japan to lobby the U.S. while closely monitoring the potential impact on the Japanese economy. Tokyo is likely to leverage its role as a key U.S. ally in countering China’s influence in the Asia-Pacific region, as well as its technological prowess in industries such as semiconductors and artificial intelligence. Japan’s trade surplus with the U.S., which stood at around $70 billion last year, is a sticking point, but Tokyo is also highlighting its status as one of the largest foreign investors in the U.S. Japanese officials are quick to point out that the interdependence of the two economies means that damaging the relationship would have significant repercussions for both sides.
South Korea is also bracing for potential economic pain, as its steel exports to the U.S. could face significant hurdles under the new tariffs. The country’s export-reliant economy is particularly vulnerable, and officials in Seoul are exploring all possible avenues to secure exemptions. There are concerns that the tariffs could lead to retaliatory measures from South Korea, potentially escalating into a trade war. South Korean businesses are already feeling the strain, as the tariffs threaten to increase the cost of steel imports and disrupt supply chains. The situation is further complicated by the fact that South Korea’s steel industry is a major employer, and any significant disruption could have broader economic and social implications.
Australia, meanwhile, is facing its own set of challenges in navigating the tariffs. While Trump initially hinted that Australia might be granted an exemption, his senior trade advisor, Peter Navarro, has since poured cold water on that prospect, accusing Australia of “killing” the U.S. aluminum market. Australian aluminum exports to the U.S. have indeed surged in recent years, reaching a peak of around 269,000 tonnes in 2019. However, exports have since fluctuated, dropping to just 83,000 tonnes in 2024. The uncertainty surrounding Australia’s exemption status has left businesses and policymakers in Canberra scrambling to find a resolution, with many expressing frustration at the chaotic and unpredictable nature of U.S. trade policy under Trump.
The situation is not without precedent. During Trump’s first term in office, he took a similarly mercurial approach to trade, sometimes granting exemptions to close allies and other times imposing punitive tariffs with little warning. In 2018, for example, Australia and South Korea were spared from the steel and aluminum tariffs, while Japan was not. The Biden administration later eased some of these restrictions, but Trump’s return to office has brought a renewed sense of unpredictability. Experts warn that the second Trump administration is even more ruthless and chaotic than the first, making it difficult for allies to navigate the diplomatic landscape. Craig Mark, an adjunct lecturer in economics at Hosei University in Tokyo, notes that the situation requires “extremely dextrous leadership” to manage the volatility.
Looking ahead, the path forward remains unclear. While Trump has hinted that he may be open to negotiations, his administration’s lack of clarity and consistency has left allies in a difficult position. Deborah Elms, head of trade policy at the Hinrich Foundation in Singapore, observes that even Trump himself may not have a clear idea of his long-term policy goals or how to achieve them. This uncertainty has left governments and businesses around the world on edge, as they struggle to anticipate the next move in what has become a high-stakes game of trade policy poker. As the situation continues to unfold, one thing is certain: the relationship between the U.S. and its key allies will be tested in ways that few could have anticipated.
