United States President Donald Trump has announced that he has struck a “massive” trade deal with Japan following months of fraught negotiations.
Under the agreement announced on Tuesday, the US will impose a 15 percent tariff on Japanese exports and Japan will invest $550bn in the US, Trump said.
“We just completed a massive Deal with Japan, perhaps the largest Deal ever made,” Trump wrote on his Truth Social platform.
“Japan will invest, at my direction, $550 Billion Dollars into the United States, which will receive 90% of the Profits.”
Japan will also open up to US exports of cars, rice and certain agricultural products, Trump said, adding that the deal would create “hundreds of thousands of jobs”.
“There has never been anything like it,” he wrote.
Speaking at a reception with members of the US Congress later on Tuesday, Trump said the sides had also agreed to form a joint venture to exploit liquified natural gas in Alaska.
“It’s a great deal for everybody. I always say it has to be great for everybody,” he said.
US Secretary of the Treasury Scott Bessent hailed the deal as a “historic agreement”.
“I am happy to reaffirm our commitment to deepening this longstanding alliance and building the next chapter of US-Japan cooperation as we enter a new Golden Age under President Trump,” Bessent said on X.
Japanese Prime Minister Shigeru Ishiba, whose ruling coalition is reeling from the loss of its upper house majority over the weekend, on Wednesday told reporters that he would “carefully examine” the details of the agreement, but he believed it was in the national interest.
Confirming local media reports, Ishiba said US tariffs on Japanese automobiles would be lowered from 25 percent tariff to 15 percent.
Trump’s auto tariffs, as well as 50 percent duties on aluminium and steel, had been a major sticking point in the months-long negotiations between Washington and Tokyo.
Japan’s trade envoy Ryosei Akazawa said the aluminium and steel tariffs were not covered in the deal and would stay in place.
Japan, which until now has been subject to Trump’s 10 percent baseline tariff as well as the higher levies on autos, steel and aluminium, was facing a 25 percent duty on most exports if Washington and Tokyo did not reach a deal by an August 1 deadline.
William Chou, deputy director of the Japan Chair at the Hudson Institute in Washington, DC, said the 15 percent tariff rate was “relatively good news” for Japan.
Japanese auto stocks soared following Trump’s announcement, with Mazda rising more than 17 percent and Toyota, Nissan and Honda up by between 8.5 and 12 percent on Wednesday morning.
Japan’s benchmark Nikkei 225, which tracks the broader stock market, rose nearly 3 percent.
“Although the specifics remain unclear, both parties called the pact deal a success,” Min Joo Kang, senior economist for South Korea and Japan at ING, said in a note.
“Trump appears to view it as a massive deal, while Ishiba characterised it in less grandiose terms. Ishiba pointed out that among countries with a trade surplus with the United States, Japan negotiated the lowest tariff rate.”
While details were sparse, Trump’s announcement is potentially the most significant of his trade deals to be unveiled so far, following preliminary agreements with the United Kingdom, Indonesia, Vietnam and the Philippines, and a 90-day trade truce with China.
Japan, the world’s fourth-largest economy, is the US’s fifth-largest trading partner.
The US imported $148.2bn worth of Japanese goods in 2024, while Japan bought $79.7bn worth of US products, according to the US Census Bureau.
“It’s a sign of the times that markets would cheer 15 percent tariffs,” said Brian Jacobsen, chief economist at US-based Annex Wealth Management.
“A year ago, that level of tariffs would be shocking. Today, we breathe a sigh of relief.”
