US President Donald Trump has announced a “massive” new trade deal with Japan, describing it maybe as the “biggest agreement ever made.”
Announced Tuesday, the agreement calls for a 15% tax on Japanese exports to the United States and a $550 billion Japanese investment in the American economy. Trump said the US would get 90% of the earnings from the investment.
Submitting on Truth According to Trump, the deal would open Japan to more US exports, especially in automobiles, rice, and agriculture, therefore generating “hundreds of thousands of jobs.”
He also discussed plans for a US-Japan collaboration to take advantage of liquefied natural gas in Alaska, describing the agreement as “a lot different from the deals in the past.”
On Wednesday, Japan’s Prime Minister Shigeru Ishiba, whose coalition just lost the upper house majority, replied gently. Though he called it “in the national interest,” he said he would “thoroughly review” the specifics of the agreement.
For Tokyo, a major compromise, the agreement lowers US auto tariffs from 25% to 15%. Japan had to meet an August 1 deadline to escape the total 25% tariff if no agreement was reached. Although analysts claim the 15% rate is a “relief” compared to recent threats, tariffs on steel, aluminum, and semiconductors remain uncertain.
Markets greeted positively. Japanese auto stocks surged, with Mazda up 17% and Toyota, Nissan, and Honda rising between 8.5% and 12%. Almost 3% was gained by the Nikkei 225.
Though information is scarce, the announcement is viewed as Trump’s most important trade agreement to date, surpassing preliminary deals with the UK, Indonesia, Vietnam, and the Philippines, and a brief ceasefire with China.
Calling the agreement “historic,” US Treasury Secretary Scott Bessent said it signals the start of a “new Golden Age under President Trump.”
Japan is the US’s fifth-biggest trading partner and the second-largest export destination. According to the US Census Bureau, the US imported $148.2 billion in Japanese goods in 2024, whereas it exported $79.7 billion.
“It’s a sign of the times that markets would cheer 15 percent tariffs,” Brian Jacobsen, an economist, remarked. That level would have been shocking a year ago. We sigh today.”
