US President Donald Trump announced a deal with Japan that reduces tariffs on Japanese imports, especially its critical autos sector, to 15 per cent from 25 per cent. Duties that were to be imposed on Japanese goods from August 1 will also be cut by the same amount.
"I just signed the largest TRADE DEAL in history with Japan," Trump said on his Truth Social platform. "This is a very exciting time for the United States of America, and especially for the fact that we will continue to always have a great relationship with the Country of Japan," he added.
Trump’s deal with his East Asian ally is seen as significant in the wake of his administration’s economical face-off with most other countries, especially China, Russia, and Brazil.
Trump also said that Japan would invest $550 billion into the US “at my direction”, besides “opening” its economy to American autos and rice.
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“This Deal will create Hundreds of Thousands of Jobs — There has never been anything like it,” the President added to his social media announcement, and said that the United States “will continue to always have a great relationship with the Country of Japan.”
Japanese Prime Minister Shigeru Ishiba, who local media say may soon resign after facing an election defeat on Sunday, hailed the deal as "the lowest figure among countries that have a trade surplus with the U.S." Ishiba said that it would benefit both sides and help them work together.
The loans and guarantees from Japanese government-affiliated institutions will help enable Japanese firms "to build resilient supply chains in key sectors like pharmaceuticals and semiconductors," Ishiba said.
While agreeing that the share of US rice imports may increase under the new framework, Ishiba insisted it did "not sacrifice" Japanese agriculture.
Japan’s markets went into overdrive following the announcement, with benchmark Nikkei stock index climbing over 3 per cent to its highest in a year, led by stocks in automakers with Toyota up more than 14 per cent and Honda nearly 12 per cent.
American automakers, however, expressed their unhappiness over the deal, saying the agreement cuts tariffs on auto imports from Japan, but leaves tariffs on imports from their plants and suppliers in Canada and Mexico at a whopping 25 per cent.
General Motors reported a 35 per cent drop in its net income during the second quarter and warned that tariffs would hit its business in the months ahead, causing its stock to tumble.
Autos form the majority of US-Japan trade, Japan being the fifth-largest US trading partner in goods, according to US Central Bureau data.
In 2024, the US imported more than $55 billion of vehicles and automotive parts, while just over $2 billion were sold into the Japanese market from the US. In the same year, two-way trade between the two countries totaled nearly $230 billion, with Japan running a trade surplus of nearly $70 billion and the US running a $69.4 billion trade imbalance on goods.
Trump is eager to strike more deals as he makes attempts to reduce the budget deficit and bring more factories into America to avoid import taxes.
So far, the US has signed trade agreements with the Philippines, that reduces tariffs to 19 per cent on its goods and no import taxes on America-made products; and another with Indonesia that also puts tariffs at 19 per cent.
America had a trade imbalance of $17.9 billion with Indonesia and an imbalance of $4.9 billion with the Philippines in 2024.
His officials remain engaged in hectic discussions with other countries to achieve trade deals before the August 1 deadline. At a Tuesday dinner, Trump said the EU would be in Washington on Wednesday for trade talks.
“We have Europe coming in tomorrow, the next day,” he told guests.
His administration has a separate negotiating period with China that is currently set to run through Aug. 12 as goods from that nation are taxed at an additional 30 per cent baseline.
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