In a major move that could reshape U.S.-Japan trade ties, former President Donald Trump has announced a new agreement aimed at boosting investment and reducing import tariffs, particularly in the automotive and agriculture sectors.
Just days before a fresh wave of tariffs was set to kick in on August 1, Trump revealed a massive $550 billion trade deal with Japan. He described it as one of the most significant trade partnerships in recent history, promising economic benefits for both sides.
Lower Tariffs on Japanese Goods, Big Gains for U.S. Exports
According to Trump’s statement on his Truth Social platform, the deal will lower U.S. tariffs on Japanese imports — including cars and agricultural products such as rice. The most eye-catching change is the reduction of import tax on Japanese automobiles, dropping from 25% to 15%. In exchange, Japan has agreed to ease restrictions on U.S. goods entering its market. This includes wider access for American farmers and exporters, a move likely to be welcomed by U.S. agriculture and manufacturing sectors.
“This is a very exciting time for the United States of America,” Trump posted, highlighting the strong, longstanding relationship between the two countries.
Immediate Market Response: Japanese Stocks Soar
News of the agreement sparked a strong reaction in Japan’s financial markets. The Nikkei index jumped 2.6%, reaching its highest level in a year. Shares of major carmakers surged — Toyota gained over 11%, while Honda and Nissan both rose more than 8%.
While Japanese companies celebrated the breakthrough, some U.S. automakers voiced concerns. Industry groups questioned whether the reduced tariffs would give Japan an unfair advantage. They pointed out that vehicles from Canada and Mexico are still subject to the 25% tariff, potentially putting them at a disadvantage.
Details Still Emerging, But Talks Confirmed as Complete
Although the full terms of the agreement haven’t been released, Japan’s chief trade negotiator Ryosei Akazawa confirmed the deal’s completion in Washington. Posting on Facebook, he shared a photo with U.S. officials and captioned it with “#MissionComplete.”
Trump spoke more about the agreement during a White House event Tuesday night, calling it possibly “the largest trade deal in history” with Japan. “We worked very hard on this. They brought their best negotiators. And it’s a deal that works for everyone,” he said.
Japan’s PM Reacts Cautiously Amid Political Uncertainty
Back in Tokyo, Japanese Prime Minister Shigeru Ishiba acknowledged receiving initial details but said he needed to understand the full agreement before making any statements. Ishiba is currently facing political pressure after his ruling coalition lost control of the upper house in a recent election, with inflation and a slowing economy fueling public discontent.
“I need to understand the full details before deciding how this deal may impact my future,” he told reporters.
A Bigger Trade Push in Motion
Trade between the U.S. and Japan reached nearly $230 billion in 2024, with Japan holding a $70 billion trade surplus. Japan remains the U.S.’s fifth-largest trade partner and its biggest foreign investor. The Trump administration is now fast-tracking multiple trade deals ahead of the August 1 tariff deadline.
Talks are ongoing with the UK, Vietnam, Indonesia, and the European Union. Discussions with China, meanwhile, remain on hold after several rounds of tariff disputes in recent years. Trump confirmed that EU trade representatives are scheduled to arrive in Washington this Wednesday for another round of negotiations.
