A “massive” trade agreement between the US and Japan has been announced by US President Donald Trump. It includes lowering tariffs on Japanese auto exports and expanding US access to vital industries like energy and agriculture.
Trump said the agreement, which he referred to as “perhaps the largest Deal ever made,” will see Japan add $550 billion into the United States under a new economic arrangement in a statement posted on his social media platform, Truth Social. He said the US will receive 90 per cent of the earnings from the Japanese investment.
Trump wrote, “We just closed a huge deal with Japan.” “It is unlike anything that has ever existed.”
Japanese exports to the US will now be subject to a 15% tax under the accord, down from the 25% duty that was previously threatened. As a result, the US will have easier access to Japan’s auto industry and be able to export rice, agricultural products, and LNG.
During a reception on Tuesday, Trump informed Congress that a joint US-Japan venture would be established to investigate Alaska’s LNG prospects. He remarked, “It’s a great deal for everybody.” “I can tell you that this is a lot different from the deals in the past.”
The declaration was met with caution from Japanese Prime Minister Shigeru Ishiba, whose alliance lost the most recent upper house elections.
Speaking to reporters on Wednesday, Ishiba indicated that the accord was in line with Japan’s national interest but said that it would be thoroughly examined.
The Japanese premier declared, “We will carefully examine the specifics of the deal.” “But we think engagement is in our economic interest, and the direction is important.”
The deal comes after months of heated talks in which Washington threatened to put high tariffs on Japanese products, such as steel, aluminum, and automobiles. If a deal was not achieved by the deadline of August 1, Japan, which has previously been subject to a baseline tariff of 10%, might be subject to 25% charges.
Trade analysts’ opinions on the development were divided. According to William Chou, deputy director of the Japan Chair at the Hudson Institute, “receiptal tariffs set at 15% down from the 25% earlier this month- is relatively good news for Japan.” “However, it is still unclear if Japan has established exemptions from Section 232 tariffs, especially in delicate industries like semiconductors and steel.”
The pact was hailed as a “historic agreement” by US Treasury Secretary Scott Bessent, who expressed hope for a new era of bilateral relations.
On X (previously Twitter), Bessent stated, “As we enter a new Golden Age under President Trump, I am happy to reaffirm our commitment to deepening this longstanding alliance and building the next chapter of US-Japan cooperation.”
The news was well received by Japanese markets, which saw notable increases in auto stocks. While Toyota, Nissan, and Honda reported gains ranging from 8.5 to 12 percent, Mazda saw a rise of over 17 percent. Early Wednesday trade saw a roughly 3% increase in Japan’s benchmark Nikkei 225 index.
Since initial deals were made with the Philippines, Vietnam, Indonesia, and the United Kingdom, the trade announcement represents one of Trump’s most significant economic engagements. Additionally, it follows a brief 90-day trade pause with China.
The US’s fifth-largest trading partner is still Japan, which has the fourth-largest economy in the world. In 2024, Japan bought $79.7 billion worth of US exports, while the US received $148.2 billion worth of Japanese imports, according to the US Census Bureau.
Although the agreement’s specifics are yet unknown, analysts think the move points to a larger change in how international markets view trade policy.
The senior economist of US-based Annex Wealth Management, Brian Jacobsen, said, “It’s a sign of the times that markets would cheer 15 percent tariffs.” That amount of tariffs would have been startling a year ago. We can exhale with relief today.
