Trump closes ‘massive’ trade deal with Japan

The United States and Japan struck a deal to lower the hefty tariffs President Donald Trump threatened to impose on goods from its Asian ally that included a US$550 billion package of US-bound investment and loans from Tokyo. The agreement will bring immediate relief to Japan’s critical automotive sector, with existing tariffs cut to 15 per cent from 25 per cent, and proposed levies on other Japanese goods that were set to come in on August 1 also cut by the same amount. Automobile exports account for more than a quarter of Japan’s exports to the US. “We just completed a massive Deal with Japan, perhaps the largest Deal ever made,” 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. Japanese Prime Minister Shigeru Ishiba, who is facing political pressure after a bruising election defeat on Sunday, hailed the deal as “the lowest figure among countries that have a trade surplus with the US”. The US investment package includes loans and guarantees from Japanese government-affiliated institutions of up to US$550 billion to enable Japanese firms “to build resilient supply chains in key sectors like pharmaceuticals and semiconductors,” Ishiba said. Japan will also increase purchases of agricultural products such as US rice, a Trump administration official said. Ishiba said the share of US rice imports may increase under its existing framework, but that the agreement would “not sacrifice Japanese agriculture”. Two-way trade between the two countries totalled nearly US$230 billion in 2024, with Japan running a trade surplus of nearly US$70 billion. Japan is the fifth-largest US trading partner in goods, US Census Bureau data showed. The announcement sent stocks in Japan higher, led by big gains in carmakers as Honda, Toyota and Nissan all gained 8 per cent or more, and US equity index futures gained ground. The yen strengthened against the US dollar. But US carmakers signalled their unhappiness with the deal, raising concerns about a trade regime that could cut tariffs on auto imports from Japan to 15 per cent while leaving tariffs on imports from Canada and Mexico at 25 per cent. Matt Blunt, who heads the American Automotive Policy Council which represents General Motors, Ford and Chrysler-parent Stellantis, said “any deal that charges a lower tariff for Japanese imports with virtually no US content than the tariff imposed on North American-built vehicles with high US content is a bad deal for US industry and US autoworkers”. Automobiles are a huge part of US-Japan trade, but it is almost all one way to the US from Japan, a fact that has long irked Trump. In 2024, the US imported more than US$55 billion of vehicles and automotive parts, while just over US$2 billion were sold into the Japanese market from the US. Trump’s announcement followed a meeting with Japan’s top tariff negotiator, Ryosei Akazawa, at the White House on Tuesday. “#Mission Complete,” Akazawa wrote on social media, later saying the deal did not include Japanese exports of steel and aluminium that are subject to a 50 per cent tariff, nor any agreement on defence budgets. Kazutaka Maeda, an economist at Meiji Yasuda Research Institute, said that “with the 15 per cent tariff rate, I expect the Japanese economy to avoid recession”. The deal was “a better outcome” for Japan than it potentially could have been, given Trump’s earlier unilateral tariff threats, said Kristina Clifton, a senior economist at the Commonwealth Bank of Australia in Sydney. Japan is the largest investor in the US. Together with pension giant GPIF and Japanese insurers, the country has about US$2 trillion invested in US markets. Besides that, Bank of Japan data shows direct Japanese investment in the US was US$1.2 trillion at the end of 2024, and Japanese direct investment flows amounted to US$137 billion in North America last year. Speaking later at the White House, Trump also expressed fresh optimism that Japan would form a joint venture with Washington to support a gas pipeline in Alaska long sought by his administration. “We concluded the one deal … and now we’re going to conclude another one because they’re forming a joint venture with us at, in Alaska, as you know, for the LNG,” Trump told lawmakers at the White House. “They’re all set to make that deal now.” Trump aides are feverishly working to close trade deals ahead of an August 1 deadline that Trump has repeatedly pushed back under pressure from markets and intense lobbying by industry. By that date, countries are set to face steep new tariffs beyond those Trump has already imposed since taking office in January. While Trump has said that unilateral letters declaring what rate would be imposed are tantamount to a deal, his team has nonetheless raced to close agreements. Trump has announced framework agreements with Britain, Vietnam, Indonesia and the Philippines, and paused a tit-for-tat tariff battle with China. The White House also laid out details of a deal with Indonesia, which would see it ease critical mineral export restrictions and also face a 19 per cent tariff. Trump said negotiators from the European Union would be in Washington on Wednesday.

Trump closes ‘massive’ trade deal with Japan

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}The US president says Tokyo has agreed to a 15 per cent tariff on Japanese goods and invest US$550 billion in America

The US president says Tokyo has agreed to a 15 per cent tariff on Japanese goods and invest US$550 billion in America