President Donald Trump’s decision to withdraw the US from the 12-nation Trans Pacific Partnership angered the Japanese, provoking fears of a bruising trade showdown between the world’s largest and third-largest economies. On Friday, the Japanese instituted a new policy that will do little to assuage those concerns.

After Japan signed a sweeping trade agreement with the European Union, a move that pundits warned would weaken the US’s position as a dominant player in the global economy, the country has taken another dramatic step clearly aimed at retaliating against the US: Japan said it would impose a temporary 50% tariff on frozen beef from the US and several other countries.

According to the Wall Street Journal, Japan’s decision to crack down on frozen beef imports was mandated by a 1994 global trade deal that would’ve been scrapped under the TPP. US trade groups are already warning about how the decision will negatively impact beef prices stateside.

“The U.S. Meat Export Federation said Japan’s move would have negative implications for both U.S. beef producers and Japanese restaurant chains that rely on frozen American beef. The group “will work with its partners in Japan to mitigate the impact” of the move as much as possible, said Chief Executive Philip Seng.

Under Japanese law, an additional tariff known as a safeguard is triggered when frozen-beef imports from all countries and frozen-beef imports from countries lacking free-trade deals with Japan - or “non-EPA countries” because they lack an economic partnership agreement with Japan - both increase by more than 17% from the same period a year earlier. The import volumes are reviewed each quarter.

US government officials couldn’t be reached immediately for comment.”

According to Japan’s Ministry of Finance, Japan imported 89,253 tons of frozen beef during the second quarter, with 37,823 tons coming from non-EPA countries. Both surpassed the “safeguard volume” initiated by the 1994 trade agreement. In Japan, frozen beef is widely used at restaurants to make hamburger patties and bowls of beef over rice, a popular fast-food item, according to WSJ. The safeguard duty affects around 12% of total beef supply in Japan, said Finance Ministry tariff official Koyu Izumi.

In recent months, frozen beef imports have been rising as merchants have sought to lock in prices before China resumes US beef imports as a part of a trade deal. China cracked down on US beef imports 14 years ago during a mad-cow diseases scare. But as beef grows in popularity among Chinese consumers, while memories of the scare have mostly faded, in the world’s second-largest economy are excited about the return of US beef to store shelves.

"American steak is delicious," said one user on China's Twitter-like Weibo service. "It doesn't have the mutton smell of domestic beef,” according to Fortune Magazine.
Japan also temporarily blocked US beef imports in 2003 after the mad-cow scare, but it resumed imports in late 2005, halted them again shortly afterward, then fully restarted them in mid-2006. The US exported $1.5 billion of beef to Japan last year, according to data from the US Meat Export Federation cited by Reuters.

Furthermore, while Trump's protectionist rhetoric has helped escalate tensions between the US and its partners, the US trade situation is improving. According to the latest reading on the US trade balance, released earlier this month, the US trader deficit shrunk in May. The trade deficit decreased in May 2017 from an unrevised $47.6 billion in April (revised). The most notable declines were seen in China and the European, where deficits declined by $2.6BN and $2.0BN respectively.

Several rival countries do have economic agreements with Japan that has exempted their beef imports from the restrictions, potentially granting them an opening to supplant US suppliers and increase their market share. These countries include as Australia, Mexico and Chile, according to Reuters. The wire service reported that Japan’s Finance Minister Taro Aso is calling foreign leaders of the affected countries to explain the increase in tariffs. But seeing as much of the US beef industry is centered on midwestern states like Nebraska that sided with Trump during the election.

We suspect Trump won’t let this go that easily.