President Donald Trump has signed an executive order lowering tariffs on Japanese cars and other imports, putting into effect a trade agreement first reached in July after months of negotiations.
The new deal reduces tariffs on Japanese automobiles from 27.5% to 15%, set to take effect within a week. It also ensures the agreed levy won’t stack on top of existing duties, with retroactive relief dating back to August 7. Other products previously taxed below 15% will now align with the new rate, while commercial aircraft and parts will remain tariff-free.
The order comes alongside major Japanese commitments, including $550 billion in investments across U.S. projects, expanded defense spending with American firms—rising to $17 billion annually—and purchases of U.S. agricultural goods such as rice, corn, and soybeans. Japan will also buy 100 Boeing planes as part of the package.
For Japan’s auto industry, the decision removes months of uncertainty. Toyota, which had warned of a $10 billion impact from U.S. tariffs, welcomed the clarity. “This framework provides much-needed stability,” the company said, noting that most of its U.S. sales already come from cars assembled in North America.
Japan’s chief trade negotiator Ryosei Akazawa, who made 10 trips to Washington during the talks, called the order “a steady implementation of the July 22 agreement.” Still, Tokyo is pushing Washington to guarantee that Japanese chips and pharmaceuticals always receive the lowest tariff rates in future U.S. trade deals.
The deal also has regional implications. South Korea, which has been negotiating for similar tariff cuts on Hyundai and Kia vehicles, is still waiting for a corresponding U.S. executive order.
Markets responded cautiously—shares of Japanese automakers ticked up on Friday, while South Korean carmakers dipped slightly.
The agreement lands at a sensitive political moment in Japan. Prime Minister Shigeru Ishiba is facing internal party pressure after election losses, and analysts say the finalized deal may not be enough to secure his leadership.
For Trump, however, the move marks another step in reshaping trade with key allies while delivering a win for U.S. manufacturers and farmers.
