U.S. President Donald Trump recently announced that a “massive” trade deal had been finalized with Japan after months of talks. According to Trump, the U.S. will impose a 15 percent tariff on Japanese products and Japan will invest $550 billion in the U.S.
“We just completed a massive Deal with Japan, perhaps the largest Deal ever made. Japan will invest, at my direction, $550 billion into the United States, which will receive 90 percent of the profits,” said the president on Truth Social.
Trump added that Japan will also open up to U.S. exports of cars, rice and certain agricultural products, adding that the deal would create “hundreds of thousands of jobs”.
“There has never been anything like it,” he added.
Earlier, Trump had announced landmark trade deals with Indonesia and the Philippines, where U.S. tariffs on imports from both nations would be set at 19 percent.
U.S. and Japan to form LNG joint venture
Later on Tuesday, during a reception with members of the U.S. Congress, Trump also announced that both countries had agreed to establish a joint venture focused on developing liquefied natural gas (LNG) resources in Alaska.
“We concluded the one deal … and now we’re going to conclude another one because they’re forming a joint venture with us at, in Alaska, as you know, for the LNG,” Trump told lawmakers at the White House. “They’re all set to make that deal now.”
Investment to build resilient supply chains in key sectors
Commenting on the deal with Japan, U.S. Secretary of the Treasury Scott Bessent said the deal is a “historic agreement with Japan, one of our great allies.”
“I am happy to reaffirm our commitment to deepening this longstanding alliance and building the next chapter of U.S.-Japan cooperation as we enter a new Golden Age under President Trump,” he added.
For his part, Japanese Prime Minister Shigeru Ishiba said U.S. tariffs on Japanese automobiles would be lowered from 25 percent to 15 percent. Trump’s tariffs on automobiles had been a key point of contention during the prolonged negotiations between Washington and Tokyo. Japan’s critical autos sector accounts for more than a quarter of its U.S. exports.
Meanwhile, Japan’s trade envoy Ryosei Akazawa said Trump’s 50 percent tariff on aluminium and steel was not covered in the deal and would stay in place. In addition, duties that were due to be imposed on other Japanese goods from August 1 will be cut by the same amount.
As for the investment package, it includes loans and guarantees from Japanese government-affiliated institutions of up to $550 billion to enable Japanese firms “to build resilient supply chains in key sectors like pharmaceuticals and semiconductors,” Ishiba said.
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Japanese market soars on trade deal news
The announcement of the tariff deal triggered a surge in Japan’s benchmark Nikkei stock index, which jumped over 3 percent to reach its highest level in a year. The rally was driven largely by auto stocks, with Toyota rising more than 14 percent and Honda gaining nearly 12 percent.
The optimism sparked by the Japan-U.S. trade deal also extended to South Korean carmaker stocks, as investors grew hopeful that South Korea might secure a similar agreement. The yen strengthened slightly against the dollar, and futures for European and U.S. equity indexes also climbed.
However, U.S. automakers expressed dissatisfaction with the deal, voicing concerns over a trade framework that lowers tariffs on Japanese auto imports while maintaining the 25 percent tariff on vehicles and parts coming from their facilities in Canada and Mexico.
Automobiles represent a major component of U.S.-Japan trade, though the flow is largely one-sided—from Japan to the U.S.—a dynamic that has long frustrated Trump. In 2024, the U.S. imported over $55 billion worth of vehicles and auto parts from Japan, while U.S. exports of similar goods to Japan amounted to just over $2 billion.
Overall, two-way trade between the nations reached nearly $230 billion in 2024, with Japan recording a trade surplus of close to $70 billion. According to U.S. Census Bureau data, Japan ranks as the fifth-largest trading partner of the United States in goods.
