US-Japan Trade Deal: Auto stocks fuel Nikkei rally, Yen strengthens, gold price eases on Trump announcement — Top points
Japan will pay a tariff of 15 per cent on goods imported in the US, Trump said. This includes tariffs on auto import.
This is a significant drop from the 25 per cent tariffs that Trump had threatened to impose from August 1, as per his letter to Japanese Prime Minister Shigeru Ishiba. The US-Japan trade deal would include $550 billion of Japanese investments in the United States, Trump said in a post on Truth Social, and added that Japan would increase market access to American producers of cars, trucks, rice and certain agricultural products, among other items.
Japanese PM Ishiba on Wednesday acknowledged the new trade agreement, saying it would benefit both sides and help them work together.
Under the agreement, auto tariffs will also be slashed, Ishiba confirmed. 'We are the first (country) in the world to reduce tariffs on automobiles and auto parts, with no limits on volume,' he told reporters. A Trump official also confirmed the development, saying auto tariffs will be charged at 15 per cent.
However, US and Japan agreed to keep the current tariff on steel and aluminium at 50 per cent as part of their bilateral trade deal, Japanese public broadcaster NHK reported on Wednesday. Japanese stocks, fulled by a rally on auto shares, surged higher on the announcement of the agreement. The benchmark Topix and Nikkei 225 share gauges both moved up over 2 per cent, with gains accelerating after the announcement. Shares of Toyota Motor Corp. jumped over 10 per cent.
The Nikkei rallied 2.4 per cent to 40,731.86, as of 0121 GMT, with the Tokyo Stock Exchange's transport equipment index surging 8.4 per cent as the news of the trade deal brought cheers to investors. The Yen also reacted positively on the news, strengthening to 146.20 per dollar as compared with close to 148 on Tuesday.
Oil prices steadied in early trading on Wednesday after falling for three consecutive sessions as a result of the US-Japan trade deal, with Brent crude futures rising by 33 cents, or 0.48 per cent, to $68.92 a barrel by 0023 GMT.
Gold prices eased on Wednesday as the US-Japan trade deal fuelled a risk appetite among investors. Spot gold was down 0.2 per cent at $3,423.44 per ounce, as of 0136 GMT, according to a report by Reuters.
(With inputs from agencies)
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