Former U.S. President Donald Trump has announced what he described as the “largest TRADE DEAL in history” with Japan, reducing tariffs on Japanese goods to 15%, down from a previously proposed 25%. The deal comes as the White House rushes to finalize key trade agreements ahead of a looming August 1 deadline for higher levies.
“This is a very exciting time for the United States of America,” Trump declared on his Truth Social platform, emphasizing continued strong ties with Japan.
Japanese negotiator Ryosei Akazawa, who met with Trump at the White House on Tuesday, called the agreement a success. “#Mission Complete,” he posted on X, formerly Twitter.
The agreement notably cuts tariffs on Japanese automobiles — which account for over 25% of Japan’s exports to the U.S. — from 25% to 15%. Japan’s Trade Minister Ishiba praised the deal as the lowest tariff rate among countries running a trade surplus with the U.S.
The announcement triggered a surge in Japanese financial markets. The Nikkei index rose 2.6% to its highest level in a year, while auto giants Toyota, Honda, and Nissan all saw their shares jump significantly. Optimism spilled over into South Korean automakers, as hopes grew for a similar trade agreement.
Despite the market enthusiasm, U.S. automakers reacted negatively. Matt Blunt, president of the American Automotive Policy Council, said the deal undermines domestic carmakers by favoring Japanese imports over North American-built vehicles.
“Any deal that lowers tariffs for Japanese cars with little U.S. content while keeping higher tariffs on Canadian or Mexican vehicles hurts U.S. workers,” Blunt warned.
In 2024, the U.S. imported over $55 billion worth of vehicles and parts from Japan but exported just over $2 billion to the Japanese market. Japan currently runs a trade surplus of nearly $70 billion with the U.S., according to Census Bureau data.
Kristina Clifton, senior economist at the Commonwealth Bank of Australia, said Japan achieved a better outcome than expected, considering earlier U.S. threats of harsher tariffs.
Japanese economists believe the reduced 15% tariff may help Japan avert a recession. Japan is the largest foreign investor in the U.S., holding nearly $2 trillion in U.S. assets, including direct investments valued at $1.2 trillion at the end of 2024.
Trump also hinted at a new energy deal, stating that Japan is prepared to enter a joint venture with the U.S. for an LNG pipeline project in Alaska — a long-term priority for his administration.
The agreement is one of several that Trump’s aides are working to finalize before the August 1 deadline. Other ongoing negotiations include trade frameworks with the UK, Vietnam, Indonesia, and the EU, as well as a tentative pause in trade tensions with China.
European Union negotiators are scheduled to arrive in Washington on Wednesday to continue talks.
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