President Donald Trump announced on Truth Social that his administration has successfully reached a deal with Japan to reduce its tariff rate to 15%.
This new rate represents a significant decrease from the 24% that Trump threatened Japan with on April 2, and the 25% proposed in a letter on July 7.
Prior to this agreement, the effective U.S. tariff rate on Japanese imports was below 2%, according to World Bank data.
Japanese Prime Minister Shigeru Ishiba confirmed the agreement, highlighting that the 15% tariff rate marks the lowest yet among countries that export more goods to the United States than they import.
“We have exerted all our efforts to protect our national interests,” Ishiba told reporters in Tokyo on Wednesday.
He emphasized the accomplishments of this deal, stating, “Among the countries that have a trade surplus with the United States, we have achieved the greatest results.”
President Trump has set August 1 as the latest deadline for countries to finalize trade agreements to avoid the imposition of higher tariffs.
Although this deadline has been pushed back in the past, Treasury Secretary Scott Bessent reiterated on Fox Business Network that it remains a firm timeline.
Since his announcement of what he termed ‘Liberation Day’ on April 2, the Trump administration has not finalized any formal trade deals, opting instead for a series of framework agreements that can later evolve into comprehensive agreements.
In an effort to mitigate the impact of Trump’s global tariffs, Japan has been actively engaging in negotiations.
Japan’s chief trade negotiator has made at least eight visits to the United States, the most recent being on Monday when he met with Commerce Secretary Howard Lutnick for over two hours.
As part of the announced agreement, Trump stated that Japan would invest $550 billion into the United States at his direction, claiming that this investment would return 90% of its profits.
However, details regarding the structure and implementation of such an investment remain unclear.
Japan is already the largest foreign investor in the U.S., with direct investments reaching $754.1 billion last year according to the U.S. Bureau of Economic Analysis.
During an event with congressional Republicans, Trump praised the agreement, stating that the tariffs “kicked in better than anybody other than me and a few of the people in the room thought could happen.”
He also revealed that Japan would form a joint venture with the United States related to liquefied natural gas in Alaska.
Last year, Japan was the fifth-largest supplier of imports to the United States, with American consumers and companies purchasing nearly $150 billion worth of goods from the nation, according to data from the Commerce Department.
The trade discussions come at a politically challenging time for Ishiba, whose Liberal Democratic Party has recently faced losses in both houses of parliament.
Ishiba vowed to continue in his leadership role, partly to navigate the impending economic challenges ahead.
Despite previous skepticism regarding the likelihood of reaching an agreement with Japan, Trump noted the resilience of Japanese negotiators as they engaged in the process.
He emphasized them as tough negotiators but also indicated an openness to a potential deal.
“We’re just going to send a letter saying, ‘This is what you’re going to pay, otherwise you don’t have to do business with us,’” he stated on June 16.
image source from：nbcnews
