US President Donald Trump has announced a new trade agreement with Japan, calling it “the largest trade deal in history with Japan.”
The deal marks a sharp pivot in economic ties between both nations, with promises of huge investment and tariff changes.
Speaking at a White House event on Tuesday, Trump said the deal followed “long and hard” negotiations with Japan’s top officials. He confirmed that Japan will invest $550 billion in the United States.
“It’s a great deal for everybody,” he said.
In return, the US will cut tariffs on Japanese vehicles and auto parts from the previously threatened 25% to 15%.
Tariffs Down, Auto Exports Up
Japan’s Prime Minister Shigeru Ishiba welcomed the deal, saying it brings a sigh of relief to Japan’s export-heavy automotive sector.
“The lowest figure to date among countries with trade surpluses with the US,” he said, referring to the new tariff rate.
Japanese cars make up a big part of the country’s trade with the US. In 2019, auto exports from Japan to America were valued at $410 billion, according to the US International Trade Administration.
Ishiba added that Japan won’t impose any quantity limits on US vehicle imports.
“We were the first in the world to reduce tariffs on cars and auto parts without any quantity restrictions,” he stated.
However, the deal offers no tariff reductions for American goods entering Japan.
US Auto Industry Unhappy
While both governments are celebrating, US carmakers are frowning.
Matt Blunt, president of the American Automotive Policy Council—which represents Ford, General Motors, and Stellantis—called the deal “a bad deal.”
He warned it leaves US automakers in Canada and Mexico exposed, since they still face a 25% tariff when trading with Japan.
Trump had previously warned of a steep 25% blanket tariff on Japanese exports if no deal was sealed by August 1. That threat came after new trade measures imposed on April 2, dubbed “Liberation Day,” were delayed for 90 days to allow for talks.
With this deal, Trump may have avoided a deeper trade war while still feeding his America-first image.
Shigeto Nagai of Oxford Economics noted, “This will be a huge boost to restore the US, fitting in with Trump’s story of reviving US manufacturing.”
A Political Lifeline for Ishiba?
Back in Tokyo, the news lifted spirits on the trading floor. The Nikkei 225 rose over 3% on Wednesday. Major auto companies like Toyota, Nissan, and Honda recorded gains.
But for Prime Minister Ishiba, the stakes are higher than stock figures.
His Liberal Democratic Party (LDP) recently lost its grip on the upper house, after already losing the more powerful lower house earlier this year. Analysts believe the trade deal could offer him breathing room.
Japan remains the world’s fourth-largest economy after the US, China, and Germany. The deal may serve both sides as a way to steady global trade in uncertain times.
Trump also announced a separate agreement with the Philippines. US imports from the Southeast Asian country will now be taxed at 19%, further pushing his push to reset Asian trade dynamics.
Rate, Like 👍, Comment💬, share this article, Follow us on our social media handles, and Submit your own story to get featured and earn rewards!
