Trump announces trade agreement with Japan, which will put 15% tariffs on all goods

U.S. President Donald Trump said Tuesday that the United States and Japan reached a deal that would reduce commodities Trump had threatened to impose from goods from its Asian allies, while promising to Japan to invest $550 billion in the United States and open markets to U.S. goods.

The agreement (including tariffs on all imported Japanese goods, compared to the proposed 25% tariff) is one of the most important trade deals in the White House, the upcoming deadline on August 1, for higher taxes to begin.

“It’s a very exciting time for the United States of America, especially for the fact that we will continue to have good relations with the Japanese country,” Trump said on his truth social platform.

Industry and government officials of the deal said the deal also reduced tariffs from 25% of Japanese cars to 15%, accounting for more than a quarter of the country’s national exports to the United States.

Trump’s announcement came on Tuesday at the White House, Ryosei Akazawa, the top Japanese tariff negotiator, at the White House.

“#smission is done,” Akazawa wrote on social media platform X.

North American automakers raise alarm

Two-way trade between the two countries totaled nearly $230 billion in 2024, and Japan operated a trade surplus of nearly $70 billion. According to data from the U.S. Census Bureau, Japan is the fifth largest trading partner of the United States.

The announcement sent higher Japanese stocks, led by huge earnings from automakers. Honda, Toyota and Nissan all received 8% or more, and U.S. stock index futures gained the base. The yen strengthened the dollar.

But U.S. automakers have expressed dissatisfaction with the deal, which has raised concerns about tariffs on potential imports from Japan, while also tariffs, with a tariff rate of 25% from Canada and Mexico.

Matt Blunt, head of the U.S. Automotive Policy Council, said on behalf of General Motors, Ford and Chrysler-parents, Stellantis, “Any tariff on imports from Japan is lower than our tariffs on North American companies, and tariffs on cars made in North America are a bad discount on our senior industrial companies for our industrial industries and our automated businesses.”

Reuters was unable to immediately confirm the elements of the deal Trump announced, with few details. The White House did not immediately respond to the request for additional details.

Japanese Prime Minister Shigeru Ishiba said in Tokyo on Wednesday that he had received preliminary reports from Washington’s trade negotiators but declined to comment on the details of the negotiations.

In Japan, Ibon was under enormous political pressure, and the ruling coalition retreated from losing control of the House of Lords in an election on Sunday.

He said he could not say how the trade agreement would affect his decision on whether to step down from the office until he saw the details.

Announced to follow Trump model

Trump’s announcement on Tuesday was a model of some previous agreements. He announced the deal on social media shortly after meetings or calling foreign officials, leaving a mystery to many key details – before another country released its own declaration.

Nearly three weeks after Trump announced a deal with Vietnam, no country issued formal statements that ostensibly reached details of the deal.

LNG joint venture

Later Tuesday night, Trump spoke at the White House on Tuesday night, saying that Japan will establish a joint venture with the United States to support a gas pipeline in Alaska.

“We came to the conclusion … Now we will end another deal because, as you know, they have a joint venture with us in Alaska,” Trump told the White House lawmakers. “They are all ready to make this deal now.”

Japanese officials initially expressed doubts about the practicality of the project, but were enthusiastic about the practicality of the project (and other investments Trump cherished) as a potential driving force for resolving a trade dispute with Washington.

The Trump aides are working to complete the trade deal before the August 1 deadline, where the president repeatedly regressed under market pressure, and industry lobbying is strong. By that date, countries will face new tariffs beyond the already imposed by Trump since taking office in January.

Although Trump said the unilateral letter announced what interest rates would be imposed were related to a deal, his team is still working to reach a deal. Trump announced a framework agreement with the UK, Vietnam, and Indonesia and suspended the battle with China’s sell-rate tax, although details will still be formulated with all of these countries.

Trump said at the White House that negotiators from the EU will be held in Washington on Wednesday.