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Donald Trump said the US had agreed the terms of a “massive” trade deal with Japan that will impose 15 per cent tariffs on goods imported into America from the world’s fourth-largest economy.
The 15 per cent levy is lower than the 25 per cent he had threatened in a letter earlier this month, but higher than the 10 per cent rate that had been in force while the countries negotiated.
The higher levies signal that Trump is willing to keep elevated tariffs on major US allies despite months of painstaking negotiation as he ratchets up his aggressive trade policy.
Dozens of nations face an August 1 deadline after which Trump has said he will impose higher tariffs, as he pushes for more deals.
The US president said Japan would “open” its markets to American cars and rice, which had been sticking points during negotiations between the close allies.
“We just completed a massive Deal with Japan, perhaps the largest Deal ever made,” Trump posted on his Truth Social platform on Tuesday. “Japan will open their Country to Trade including Cars and Trucks, Rice and certain other Agricultural Products, and other things. Japan will pay Reciprocal Tariffs to the United States of 15%.”
Japanese Prime Minister Shigeru Ishiba declined to make a statement on the agreement until he had “examined the details” after receiving a report from chief negotiator Ryosei Akazawa, who met Trump on Tuesday.
Trump did not indicate whether Japan would get any relief from the sweeping 25 per cent tariff imposed on imports of cars and car parts into the US. The automotive sector is a pillar of the Japanese economy that makes up the bulk of its $63bn trade surplus with the US. He also made no mention of relief for Japan from the US’s 50 per cent tariff on imports of steel and aluminium.
One person on the Japanese side familiar with the negotiations said that tariffs on auto imports would be reduced to 15 per cent. Shares in Japanese auto producers surged on hopes of a favourable tariff for car exporters with Toyota and Honda rallying 9 per cent, while Subaru, Mitsubishi Motors and Subaru all gained more than 12 per cent.
The yen weakened 0.1 per cent to ¥146.8 against the dollar after Trump’s announcement, having strengthened earlier in the day. Japan’s benchmark Topix rose 2.1 per cent in early trading in Tokyo.
Akazawa has engaged in eight rounds of talks with his counterparts, including US commerce secretary Howard Lutnick and US Treasury Secretary Scott Bessent, in an effort to hammer out a deal.
Japan would be the largest economy yet to strike a deal with the US since Trump announced his “reciprocal” tariffs in April.
The US announced a deal with the UK earlier this summer, and in recent weeks has struck deals with Vietnam, the Philippines and Indonesia. It has reached an agreement to de-escalate tariffs with China.
Trump said on Tuesday that Japan would invest more than half a trillion dollars in the US, without providing details of who would make the investment and over what timeframe.
“Japan will invest, at my direction, $550 Billion Dollars into the United States, which will receive 90% of the Profits”, claiming the inflows would create hundreds of thousands of jobs.
In remarks at the White House after the announcement, Trump added that the US and Japan would enter into a liquefied natural gas joint venture in Alaska.
“I said to the Japanese trade representatives . . . ‘now we’re going to conclude another [deal]’”, Trump said. “They’re forming a joint venture with us in Alaska . . . for the LNG.”
The trade deal comes days after Ishiba’s Liberal Democratic party suffered a setback in an upper house election that severely weakened his ability to lead the country and pass legislation.
While Trump said the US had a “great relationship” with Japan, the trade deal comes as relations between the two allies have become strained over defence spending — which the US is pressing Tokyo to increase.
Additional reporting by William Sandlund in Hong Kong
