WASHINGTON/TOKYO — The United States and Japan struck a deal to lower the hefty tariffs President Donald Trump threatened to impose on goods from its Asian ally that included a $550 billion package of US-bound investment and loans from Tokyo.
The agreement will bring immediate relief to Japan’s critical autos sector with existing tariffs cut to 15 percent from 25 percent, and proposed levies on other Japanese goods that were set to come in on August 1 also cut by the same amount.
Autos make up more than a quarter of all Japan’s exports to the United States.
“I just signed the largest TRADE DEAL in history with Japan,” Trump said on his Truth Social platform. “This is a very exciting time for the United States of America, and especially for the fact that we will continue to always have a great relationship with the Country of Japan,” he added.
Ishiba, who local media reported will soon resign after a bruising election defeat on Sunday, hailed the deal as “the lowest figure among countries that have a trade surplus with the US”
The US investment package 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.
Japan will also increase purchases of agricultural products such as US rice, a Trump administration official said. Ishiba said the share of US rice imports may increase under its existing framework but that the agreement would “not sacrifice Japanese agriculture.”
The announcement ignited a rally in Japanese stocks, with the benchmark Nikkei climbing 2.6 percent to its highest in a year. Shares of automakers surged in particular, with Toyota up more than 11 percent, and Honda and Nissan both up more than 8 percent.
The exuberance extended to shares of South Korean carmakers as well, as the Japan deal stoked optimism that South Korea could strike a comparable deal. The yen firmed slightly against the dollar, while European and US equity index futures edged upward.
But US automakers signaled their unhappiness with the deal, raising concerns about a trade regime that could cut tariffs on auto imports from Japan to 15 percent while leaving tariffs on imports from Canada and Mexico at 25 percent.
“Any deal that charges a lower tariff for Japanese imports with virtually no US content than the tariff imposed on North American-built vehicles with high US content is a bad deal for US industry and US auto workers,” said Matt Blunt, who heads the American Automotive Policy Council which represents General Motors Ford and Chrysler parent Stellantis
`Mission complete’
Autos are a huge part of US-Japan trade, but almost all of it is one way to the US from Japan, a fact that has long irked Trump. In 2024, the US imported more than $55 billion of vehicles and automotive parts while just over $2 billion were sold into the Japanese market from the US
Two-way trade between the two countries totaled nearly $230 billion in 2024, with Japan running a trade surplus of nearly $70 billion. Japan is the fifth-largest US trading partner in goods, US Census Bureau data show.
Trump’s announcement followed a meeting with Japan’s top tariff negotiator, Ryosei Akazawa, at the White House on Tuesday.
