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Trade war

Japan dodges beef tariff row with US as imports stay low

Quarterly meat purchases miss threshold for higher duty

U.S. beef goes into gyudon, a fast-food staple in Japan.

TOKYO -- Japan's imports of beef have come in below a level that would have triggered an automatic tariff hike, avoiding a potential flare-up in trade tensions with U.S. President Donald Trump.

Imports of frozen beef totaled about 90,000 tons in the quarter ended June, below the roughly 104,000 tons that would have activated a so-called safeguard mechanism, the Finance Ministry said Friday.

The safeguard raises tariffs to 50% from 38.5% for the rest of a fiscal year when import volume climbs more than 17% on the year in any quarter.

That hurts mainly U.S. beef, since the hike does not apply to Australia and other big producers with which Japan has signed economic partnership agreements. Together, American and Australian beef account for about 90% of Japanese frozen beef imports.

U.S. Trade Representative Robert Lighthizer told lawmakers on Thursday that beef is one area where Japan imposes "unfair barriers to U.S. exports," suggesting that he would raise the issue in an upcoming meeting with Japanese counterpart Toshimitsu Motegi.

The beef safeguard was activated in 2017 for the first time in 14 years and raised tariffs until March 31. Japan's meat industry issued a sigh of relief this time because importers bear the cost of higher tariffs.

"Every company was careful about their import volume to avoid activating the safeguard again," said an official from the Japan Meat Traders Association.

The U.S. and Australia combined make up about 90% of Japan's frozen beef imports.

The high level of imports in the year-earlier quarter meant that the safeguard was less easily triggered this time.

It also avoided drawing the likely ire of Trump as he campaigns to narrow U.S. trade deficits with countries like Japan and China by pushing for "free, fair and reciprocal" trade.

"Who knows what will happen if the safeguard kicks in again," a Japanese government source said before the quarterly import figures were announced.

Frozen U.S. beef is used in dishes like gyudon, a Japanese fast-food staple consisting of seasoned beef and onions over rice.

Others highlight the mechanism's destabilizing effect on Japan's beef imports, which surged after the tariff reverted to the lower level in April. Import volume from the U.S. and other countries subject to the safeguard fell 20% on the year in January, 60% in February and 50% in March before rising roughly 70% in April.

Industry insiders had warned that the safeguard might be reactivated as overall beef import volume climbed 30% on the year in April. But figures for May and June came in about 10% below year-earlier levels.

The Finance Ministry began to study proposals last year to base the safeguard trigger on six-month or annual imports instead of quarterly figures. Some think a longer interval would make procurement easier, while others argue that the safeguard can be deployed more flexibly under the current system.

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