President Donald Trump has announced the completion of a substantial trade agreement with Japan, marking a significant development following months of complex negotiations.
The agreement, unveiled on Tuesday, includes a 15 percent tariff on Japanese exports and a commitment from Japan to invest $550 billion in the United States, as stated by Trump on his Truth Social platform.
In his announcement, Trump conveyed his enthusiasm: “We just completed a massive Deal with Japan, perhaps the largest Deal ever made. Japan will invest, at my direction, $550 Billion Dollars into the United States, which will receive 90% of the Profits.”
Additionally, the trade deal will open up US markets to Japanese exports of automobiles, rice, and certain agricultural products. Trump emphasized that this agreement would generate “hundreds of thousands of jobs” in the US.
In a later reception with members of Congress, Trump shared further details, noting an agreement to initiate a joint venture to develop liquefied natural gas resources in Alaska. He reiterated the deal’s advantages for all parties involved, stating, “It’s a great deal for everybody. I always say it has to be great for everybody.”
The US Secretary of the Treasury, Scott Bessent, praised the agreement as a “historic agreement,” expressing optimism about the strengthening of US-Japan relations.
“We are committed 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 stated on X.
Meanwhile, Japanese Prime Minister Shigeru Ishiba acknowledged the importance of the agreement but mentioned the need for a thorough review of its details. Ishiba, whose ruling coalition recently suffered a setback by losing its upper house majority, indicated that the deal aligns with Japan’s national interest.
He confirmed local media reports that tariffs on Japanese automobiles would decrease from 25 percent to 15 percent. Trump’s auto tariffs, along with the 50 percent duties on aluminum and steel, had been critical points in the protracted discussions between Tokyo and Washington.
Japan’s trade envoy, Ryosei Akazawa, clarified that the existing tariffs on aluminum and steel would remain unchanged and were not part of the new deal.
Japan found itself facing a potentially damaging 25 percent tariff on most exports if an agreement had not been met by the August 1 deadline. Therefore, the 15 percent tariff rate represents a favorable outcome for Japan.
Following Trump’s announcement, Japanese automobile stocks rallied significantly, with Mazda shares rocking up over 17 percent. Major players like Toyota, Nissan, and Honda also saw increases ranging from 8.5 to 12 percent on Wednesday morning.
Consequently, Japan’s benchmark Nikkei 225 index rose nearly 3 percent, reflecting the positive market response to the trade deal.
Economic experts are cautiously optimistic about the agreement. Min Joo Kang, a senior economist for South Korea and Japan at ING, observed, “Although the specifics remain unclear, both parties called the pact a success. Trump appears to view it as a massive deal, while Ishiba characterized 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.”
The implications of this announcement are potentially substantial, marking one of Trump’s most significant trade deals amid previous preliminary agreements with other nations, including the United Kingdom and a 90-day trade truce with China.
As the world’s fourth-largest economy and the US’s fifth-largest trading partner, Japan’s involvement in this trade deal is noteworthy. In 2024, the US imported $148.2 billion worth of goods from Japan, while Japan purchased $79.7 billion worth of products from the US, according to the US Census Bureau.
Reflecting on the current market dynamics, Brian Jacobsen, chief economist at US-based Annex Wealth Management, remarked, “It’s a sign of the times that markets would cheer 15 percent tariffs. A year ago, that level of tariffs would be shocking. Today, we breathe a sigh of relief.”
image source from：aljazeera
