Donald Trump announced on Tuesday a new trade agreement between the US and Japan that had previously seemed unlikely.
The US president wrote on Truth Social: “We just completed a massive Deal with Japan, perhaps the largest Deal ever made.”
According to the agreement, American importers will pay 15% “reciprocal” tariffs on Japanese products shipped to the US.
In addition, Japan intends to invest $550 billion in the American economy. According to Trump, 90% of the profits from this deal will go to the United States, but he did not specify the details of the investment structure or the profit calculation mechanisms. CNN notes that no official document with the details of the agreement has been published yet.
Trump added that the agreement will create hundreds of thousands of jobs and open the Japanese market to American goods, including passenger and commercial vehicles, rice and other agricultural products.
In response, Japanese Prime Minister Shigeru Ishiba said that his government would carefully study the content of the agreement and, if necessary, organise negotiations with Trump. However, like the American side, he did not provide any specific details.
“We negotiated until the last moment, trying to find a balance between the interests of both countries,” Ishiba said.
The agreement is the result of months of negotiations between the US and key trading partners, including the EU, South Korea and India, against the backdrop of the approaching deadline for the introduction of new tariffs on August 1.
US-Japan trade issues
Negotiations between the US and Japan had previously been described as tense. In June, Trump called the Japanese “tough” negotiators, but on Tuesday he noted that the agreement marked “a very exciting time for America,” emphasising the importance of stable relations between the two countries.
One of the contentious issues in the negotiations was rice exports. According to data, Japan purchased $298 million worth of American rice last year and $114 million in the first four months of this year. However, a report by the US Trade Representative’s Office under the Biden administration indicated that Japan’s rice import system remains opaque and restricts American companies’ access to local consumers.
Another key point of discussion was automobiles, the backbone of the Japanese economy. Trump previously claimed that Japan imports virtually no American cars: “We haven’t sold them a single car in 10 years.” However, data from the Japan Automobile Importers Association shows that Japan purchased 16,707 American cars last year.
Japan ranks fifth among the largest suppliers of goods to the US. According to the Ministry of Trade, Japanese exports to the US amounted to $148 billion last year. The main categories include cars, auto parts, agricultural and construction equipment. These goods were subject to 24% tariffs for a short period before Trump introduced a 90-day delay in April. The tariff was subsequently reduced to 10%. In July, Trump sent Ishiba a letter threatening to raise the tariff to 25% from August 1.
At the same time, US exports to Japan amounted to $80 billion, including oil and gas, pharmaceuticals and aerospace products.
