TOKYO, May 26, 2025 (AFP) - The United States and Japan agreed in their latest tariff negotiations to "accelerate" efforts towards an agreement, Tokyo said Monday.

Japan, a key US ally and its biggest investor, is subject to the same 10 percent baseline tariffs imposed on most nations plus steeper levies on cars, steel and aluminium.

US President Donald Trump also announced 24 percent "reciprocal" tariffs on Japan in early April, but later paused them along with similar measures on other countries until early July.

Japan wants all levies on its imports announced by Trump lifted.

Ryosei Akazawa, Tokyo's tariffs envoy, held a third round of talks in Washington over the weekend and is due to return this week.

The two countries confirmed "we will accelerate efforts to realise an agreement that is mutually beneficial," Japan's top government spokesman Yoshimasa Hayashi said Monday.

Prime Minister Shigeru Ishiba on Sunday also touted "progress" made by Akazawa's latest round of talks.

Ishiba has suggested he aims to hammer out an agreement with Trump when the two leaders meet at the annual Group of Seven gathering next month in Canada.

"I expect discussions will further continue with the G7 summit in mind," Ishiba told reporters Sunday.

Ishiba, who met Trump at the White House in February, spoke by phone with the president for around 45 minutes last week, according to Tokyo.

Floated as one of Japan's bargaining chips is its technological prowess in shipbuilding, including of ice-breakers, according to local media.

"The US is interested in potentially having Japan repair American warships, which is something we're willing to support," public broadcaster NHK quoted Ishiba as saying.

Another potential sweetener is the idea of a joint US-Japanese sovereign wealth fund floated according to the Financial Times by SoftBank founder -- and Trump friend -- Masayoshi Son.

The fund, discussed directly between Son and US Treasury Secretary Scott Bessent, would make large-scale investments in tech and infrastructure across the United States, the FT reported.

Contacted by AFP, SoftBank declined to comment.

Trump's 25-percent auto tariffs are particularly painful for Tokyo, with roughly eight percent of all Japanese jobs tied to the sector.

The world's fourth-largest economy contracted 0.2 percent in the first quarter of 2025, adding to pressure on the unpopular Ishiba ahead of upper house elections expected in July.