- Tariffs on Japanese items cut to 15% from 25%
- Japanese stocks jump, yen strengthens against dollar.
- Tokyo to increase the purchase of US agricultural products.
Washington/Tokyo: The United States and Japan entered into an agreement to lower the fierce tariffs that President Donald Trump threatened to impose goods from its Asian allies, which included a $ 550 billion-boning package with US-bound investment and loans from Tokyo.
The agreement will bring immediate relief to Japan’s critical car sector with existing tariffs cut to 15% from 25% and proposed charges on other Japanese goods set to enter on August 1 was also cut from the same amount.
Autos makes up more than a quarter of all Japan’s exports to the United States.
“I just signed the biggest trade agreement in history with Japan,” Trump said on his truth’s social platform. “This is a very exciting time for the United States of America, and especially for the fact that we will continue to have a good relationship with Japan’s country,” he added.
Ishiba, as local media reported, will soon resign after a blue election defeat on Sunday, paid tribute to the deal as “the lowest figure among countries that has a trade surplus with the United States”.
The US investment package includes loans and guarantees from Japanese state -related institutions of up to $ 550 billion to enable Japanese companies “to build elastic supply chains in key sectors such as pharmaceutical drugs and semiconductors,” Ishiba said.
Japan will also increase the purchase of agricultural products such as American rice, a Trump administration worker said. Ishiba said the proportion of American Risimport may increase under its existing framework, but that the agreement would not sacrifice Japanese farming. “
The message ignited a demonstration in Japanese shares, with benchmark Nikkei climbing 2.6% to its highest in one year. Shares of car manufacturers rose especially, with Toyota rose more than 11%, and Honda and Nissan both rose more than 8%.
The overrun also expanded to shares in South Korean carmakers when the Japan agreement stabbed optimism that South Korea could beat a comparable deal. Yen fired a little against the dollar, while European and American stock index futures angled upwards.
But US car manufacturers signaled their misfortune with the deal and raised concerns about a trade regime that could cut car import tariffs from Japan to 15%while leaving tariff rates on imports from Canada and Mexico to 25%.
“Any agreement charging a lower customs duty for Japanese imports with almost no US content than the tariff imposed on North American built vehicles with high US content is a bad deal for the US industry and US auto workers,” said Matt Blunt, who leads the US car policy council representing General Motors Ford and Chrysler Parent Stellantis.
‘A better result’
Cars are a huge part of trading in USA-Japan, but almost the whole thing is a way for the United States from Japan, a fact that has long annoyed Trump. By 2024, the United States imported more than $ 55 billion vehicles and car parts, while just over $ 2 billion was sold to the Japanese market from the United States.
Two-way trade between the two countries accounted for nearly $ 230 billion in 2024, with Japan running a trade surplus of almost $ 70 billion. Japan is the fifth largest US trading partner in goods, the US Census Bureau data data shows.
Trump’s announcement followed a meeting with Japan’s top customs dealer, Ryosei Akazawa, in the White House on Tuesday.
“#Mission Complete,” Akazawa wrote on X, later said that the agreement did not include Japanese exports of steel and aluminum subject to a 25% duty or any defense budget agreement.
The deal was “a better result” for Japan than it could potentially have been, considering Trump’s former unilateral customs threats, said Kristina Clifton, a senior economist at the Commonwealth Bank of Australia in Sydney.
Kazutaka Maeda, an economist at Meiji Yasuda Research Institute, said that “With the 15% customs duty, I expect the Japanese economy to avoid recession.”
Japan is the largest investor in the United States. Together with pension giant GPIF and Japanese insurance companies, the country has the country about $ 2 trillion invested in US markets.
In addition, the Bank of Japan data showing direct Japanese investment in the United States was $ 1.2 trillion at the end of 2024, and Japanese direct investment flows amounted to $ 137 billion in North America last year.
In a speech later in the White House, Trump also expressed fresh optimism that Japan would form a joint venture with Washington to support a gas pipeline in Alaska, which long sought from his administration.
“We finished one appointment […] And now we want to finish someone else because they form a joint venture with us in Alaska that you know, for LNG, “Trump said to Legislators in the White House.” They are all ready to make this deal now. “
Trump helpers work feverishly to close trade agreements before a deadline of August 1st, which Trump has repeatedly pushed back under pressure from markets and intense lobbying after industry. On that date, the countries are set to meet steep new tariffs beyond those Trump has already imposed since accession in January.
Trump has announced framework agreements with Britain, Vietnam, Indonesia and paused a tit-for-tate-duty match with China, although details still have to be prepared with all these countries.
In the White House, Trump said retailers from the European Union would be in Washington on Wednesday.
