U.S. President Donald Trump on Tuesday announced a sweeping trade agreement with Japan, which he described as “massive,” featuring reciprocal 15% tariffs on Japanese exports to the United States.
Posting on Truth Social, Trump touted the accord as “perhaps the largest deal ever made,” revealing that Japan would commit to investing $550 billion into the U.S. economy. He also claimed the United States would “receive 90% of the profits” from the agreement.
According to Trump, the deal requires Japan to open its market to American exports, including automobiles, trucks, rice, various agricultural products, and more. The president said the pact would generate “hundreds of thousands of jobs” for Americans.
Shortly after Trump’s announcement, Japan’s chief trade negotiator, Ryosei Akazawa, shared a post on X (formerly Twitter) declaring “#Mission Accomplished,” and extended “heartfelt thanks to everyone involved,” based on a Google translation from Japanese.
In a follow-up speech, Trump revealed that both nations were finalizing a separate agreement on liquefied natural gas (LNG), and hinted at a forthcoming trade deal with Europe, though he did not provide specifics.
Brian Jacobsen, Chief Economist at Annex Wealth Management, told CNBC, “A year ago, that level of tariffs would be shocking. Today, we breathe a sigh of relief.”
Japan’s national broadcaster NHK, citing government sources, reported that U.S. auto tariffs on Japanese vehicles would be reduced from 25% to 15%. Automobile exports form a crucial part of Japan’s economy, accounting for 28.3% of total exports in 2024.
Despite the agreement, Japanese car, bus, and truck exports to the U.S. plunged by 26.7% in June, following a 24.7% drop in May. Overall Japanese exports to the United States — Japan’s second-largest trading partner — amounted to 10.3 trillion yen ($70.34 billion) between January and June, down 0.8% year-on-year.
Earlier this month, Trump had issued a tariff notice to Japan, threatening to raise levies to 25% starting August 1 — one percentage point higher than the 24% rate introduced during his April 2 “Liberation Day” announcement.
The announcement came just days after Japanese Prime Minister Shigeru Ishiba’s ruling coalition lost its majority in the Upper House elections, raising concerns about Japan’s weakened bargaining power in trade talks.
In an analysis published Monday, HSBC noted, “For Prime Minister Ishiba, a favorable U.S. trade deal could help stave off a no-confidence motion or an internal leadership challenge within the LDP [Liberal Democratic Party].”
While Ishiba initially stated he would remain in office despite the election setback, Japan’s Yomiuri newspaper reported Wednesday that he would reassess his position after reviewing the progress of tariff negotiations.
