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The US and Japan are holding trade talks, and a deal could settle shaky markets

US and Japanese trade negotiators are meeting this week. A deal would ease mounting concerns about global trade and raise hopes of an end to the US-China trade war.

Japan’s economic minister, Toshimitsu Motegi, will meet US Trade Representative Robert Lighthizer in Washington, DC on Wednesday and Thursday. The talks come as the Trump administration prepares to escalate its trade war with China: it plans to extend tariffs to virtually all Chinese goods, with the first tranche at the start of September and a second tranche in mid-December.

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Japan wants a deal that reduces tariffs on industrial goods and auto parts it exports to the US, and exempts it from tariffs of 25% on imported cars set to take effect in November. Auto exports account for about two-thirds of the US trade deficit with the world’s third-biggest economy, at about 7 trillion yen ($65.8 billion) a year, according to Reuters.

Meanwhile, the US is keen to export more agricultural goods to the Asian nation and secure lower tariffs on beef and pork products, Reuters said.

The talks could lay the groundwork for the two nations’ leaders, President Donald Trump and Prime Minister Shinzo Abe, to hash out a trade agreement on the sidelines of the G7 summit in France this month. The pair could also strike a deal at the UN General Assembly meeting in late September.

The Trump administration’s trade disputes with China, India, Germany, and other nations have weighed on market sentiment and global economic growth. A deal between the US and Japan could settle nerves and raise hopes of similar agreements with other trading partners.

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