If no deal is made, Japanese imports face a 25 percent tariff from Trump, which threatens to drive up prices in the U.S. on affected goods. Japan mostly exports vehicles, machinery, and electronics to the U.S. It also risks damaging relations with a key Pacific ally of Washington.

Unlike the European Union, the Japanese government has made no indication it plans to impose any kind of reciprocal tariff on the U.S., even if the U.S. does move forward with its planned 25% tariffs on all Japanese exports.

Japanese Prime Minister Shigeru Ishiba said Monday he will stay in office to tackle challenges such as rising prices and high U.S. tariffs after a weekend election defeat left his coalition with a minority in both parliamentary chambers.

Japanese Prime Minister Shigeru Ishiba will continue in office despite his party's election loss. He emphasised preventing a political vacuum and addressing issues like rising living costs, while planning to negotiate with the US on tariffs ahead of the August 1 deadline.

Japan's top tariff negotiator Ryosei Akazawa will visit Washington from Monday for an eighth round of trade talks, with the deadline for U.S. President Donald Trump's so-called reciprocal tariffs looming on Aug.

Exports from Japan declined again in June, following a 1.7% drop in May, as U.S. tariffs continue to heighten the risk of a recession. According to a CNBC report, exports from the Asian powerhouse declined 0.

More than two-thirds of Japanese firms believe the government should compile an extra budget later this year to mitigate the impact of U.S. President Donald Trump's new tariffs and rising prices, a Reuters survey showed on Thursday.

Small and medium-sized firms like Mitsuwa Electric that form the backbone of Japan's economy have weathered many storms over the decades, and company president Yuji Miyazaki is hopeful they will also withstand Donald Trump.

Japan has reported a trade deficit of 2.2 trillion yen ($15 billion) for the first six month of this year as exports were hit by President Donald Trump's higher tariffs.