Trump cuts tariffs to 15%, says Japan will invest $550 bn in US.
The President of the United States, Donald Trump, has announced the conclusion of a trade agreement with Japan, which results in a reduction of the tariff rate on Japanese goods from 25 percent to 15 percent. Trump made this announcement via his private social media platform, Truth Social. He stated, “We just completed a massive Deal with Japan, perhaps the largest Deal ever made.” Japan will allocate $550 billion to the United States, which is projected to garner 90% of the profits. [sic]
He further asserted that this trade agreement with Japan “will create Hundreds of Thousands of Jobs — There has never been anything like it.” Japan is poised to enhance its trade landscape by opening its markets to various sectors, including automobiles, rice, certain agricultural products, and additional commodities. Japan is set to impose Reciprocal Tariffs on the United States at a rate of 15%.
During a White House event, Trump suggested the possibility of entering into a joint venture with Japan to facilitate the export of liquefied natural gas from Alaska. A report referencing public broadcaster NHK indicated that Washington might reduce rates in the auto sector to 15 percent. Following the announcement, there was a notable increase in the stock prices of Japanese car manufacturers, exemplified by Toyota Motors, which experienced a rise exceeding 11 percent. Japanese stocks on the Topix benchmark index experienced an increase of up to 2.6 percent, while US equity futures showed a slight upward movement. Prime Minister Shigeru Ishiba stated, “Japan and the US have been conducting close negotiations with our national interests on the line,” further emphasizing that both nations will persist in their collaborative efforts to generate employment and produce quality goods.
The recent agreement signifies a change in Trump’s position and follows a correspondence sent to Japan and South Korea, detailing updated tariff rates. On July 7, the US President pointed to the ongoing trade deficit with Japan and South Korea as justification for imposing a 25 percent tariff, set to take effect on August 1, 2025. In a correspondence directed to Japanese Prime Minister Shigeru Ishiba, Trump cautioned against any retaliatory actions and articulated, “If for any reason you decide to raise your Tariffs, then, whatever the number you choose to raise them by, will be added onto the 25% that we charge.” He also noted that these tariffs could be adjusted either upward or downward, contingent upon Washington’s diplomatic relations with the respective countries.
