The United States has reached a trade deal with Japan, US President Donald Trump said on Wednesday (IST), bringing down the tariff rate on Japanese goods from 25 per cent to 15 per cent.
"We just completed a massive Deal with Japan, perhaps the largest Deal ever made. Japan will invest, at my direction, $550 Billion Dollars into the United States, which will receive 90% of the Profits," Trump said on his social-media platform, Truth Social.
He added that this trade deal with Japan will create ‘hundreds of thousands of Jobs’. “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%,” he stated.
As per a Bloomberg report, Trump while addressing a White House event also hinted at signing a joint LNG export deal with Japan, in Alaska.
How Japan Reacted to Tariffs Being Lowered
Washington may also bring down rates on auto sector imports to 15%, Bloomberg reported while citing public broadcaster NHK. Following the announcement, shares of Japanese carmakers jumped on the Tokyo Stock Exchange with Toyota Motors rising around 15%, while Honda Motor Co rose around 11%. In addition, Japanese stocks on the Topix benchmark index rose as much as 2.6 per cent and US equity futures also edged higher.
Commenting on the latest development, Japan’s Prime Minister Shigeru Ishiba said, "Japan and the US have been conducting close negotiations with our national interests on the line". He further stated that the two nations will continue to work together to create jobs and good products.
Japan’s key exports to the US include vehicles, machinery as well as electronic and electrical equipment. On the other hand, US mainly exports chemicals, plastics, rubber and leather goods to Japan.
Trump’s New Tariff Rate Letter
Earlier on July 7, Trump had said that there has been a persistent trade deficit with Japan and South Korea, thereby charging them a 25 per cent tariff that would come into effect on August 1, 2025.
However, the latest deal marks a shift in Trump's stance and comes weeks after he sent out new tariff rates letters to Japan and South Korea.
In the letter addressed to the Japanese Prime Minister, Trump had warned the country against retaliatory measures and said, "If for any reason you decide to raise your Tariffs, then, whatever the number you choose to raise them by, will be added onto the 25% that we charge.”
He also clarified that these tariffs may be modified upward or downward, depending on Washington's relations with the respective countries.
