TMTPOST -- U.S. President Donald Trump on Tuesday touted a “massive” with Japan that is going to set reciprocal tariffs on the Asian ally at a relatively lower rate and secure hundreds of billions of dolars’ investments in his country.
Credit：Ryosei Akazawa's X Post
“We just completed a massive Deal with Japan, perhaps the largest Deal ever made," Trump wrote in a post on his social media platform Truth Social. “Japan will invest, at my direction, $550 Billion Dollars into the United States, which will receive 90% of the Profits. ” He said the deal includes a 15% reciprocal tariffs on Japan and expected that the deal to create “ Hundreds of Thousands of Jobs — There has never been anything like it.”
Besides massive investments, Trump believed what seems to be most important is that Japan will open up its market to U.S. cars and agricultural products including the rice. “Perhaps most importantly, Japan will open their Country to Trade including Cars and Trucks, Rice and certain other Agricultural Products, and other things,” he wrote in the post.
Japanese top trade negotiator Ryosei Akazawa shortly after Trump’s post said “#Mission Accomplished” in a post on X. Akazawa, head of Japan’s Economic Revitalization Ministry, last Saturday forwarded a post from U.S. Treasury Secretary Scott Bessent, saying he fully agrees with his U.S. counterpart that “a good deal is more important than a rushed deal”. He also remained sort of optimistic on a trade deal. A mutually beneficial trade agreement between Japan and U.S. remains possible, Akazawa wrote in the post.
Japanese Prime Minister Shigeru Ishiba said Japan’s auto exports to U.S. will face a 15% tariff rate, down from the current 25% levied across countries, according to Reuters. In addition to the 10% worldwide baseline tariffs, Japan now also faces a 25% U.S.-imposed tariff on automobiles and auto parts, and a 50% tariff on steel and aluminum. Auto exports accounted for 28.3% of all shipments in 2024, according to Japanese customs data.
Japanese automakers’ shares surged following the trade deal announcement. Shares of Mazda Motor gained as much as nearly 18% on Wednesday. Both Toyota and Mitsubishi Motors stocks jumped more than 10% at midday, while Honda and Nissan stocks each rose over 8%.
The 15% tariff rate is not just lower than the 24% tariffs the Trump administration originally implemented in early April, but also lower than the 25% tariffs that Trump threatened the U.S. would charge on all of imports from Japan starting on August 1. During his letter to Ishiba released on July 7, the new tariffs will separate from all existing sectoral tariffs, and goods transshipped to evade a higher tariff will be subject to that higher tariff.
Trump on July 7 also signed an executive order, delaying the tariff deadline on July 9 to August 1. The executive order effectively extended the July 9 deadline by more than three weeks.
Ishiba on July 8 called the new 25% tariffs “extremely regrettable” but said he was determined to continue negotiating. Tokyo will continue to seek a pact with the U.S. "that benefits both countries, while protecting Japan's national interests" Ishiba told a cabinet meeting in televised remarks. Ishiba said Trump’s tariff rate is lower than the levels he had threatened earlier and opens the way for further negotiations.
It was reported at the start of this month that the Japanese officials insisted they are not going to accept the 25% auto tariffs remain in place under the possible trade deal. Despite prior ministerial-level rounds of negotiations until early July, little progress had been made in Japan's attempt to seek tax exemption.
Ishiba on July 3 pledged to defend national interest in the face of Trump’s threat of higher tariffs. But the trade deal became more helpful for the prime minister after the governing coalition lost its majority in Japan’s upper house elections on the weekend. For Ishiba, “a favourable U.S. trade deal could help stave off a no-confidence motion or internal challenge from the LDP [Liberal Democratic Party],” HSBC said in a note on Monday.
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