23-07-2025
Trump and Japan reach trade deal with tariff rate set at 15%
US president Donald Trump reached a trade deal with Japan that will impose 15 per cent tariffs on US imports from the country, including its auto sector, while creating a $550 billion (€468.74 billion) fund backed by the Japanese to make investments in the United States.
The agreement, touted by Mr Trump after securing breakthroughs in a final 75-minute Oval Office meeting Tuesday with Japan's top trade negotiator, spares the key US ally from a threatened 25 per cent tariff set to take effect next week and raises hope for other trade deals over the coming days.
'They had their top people here and we worked on it long and hard, and it's a great deal for everybody,' Mr Trump said at a White House event Tuesday evening.
Under the deal, Japanese automobiles and parts would be subjected to the same 15 per cent rate as other of the country's exports, according to a senior US administration official, speaking on condition of anonymity to outline the agreement. In return, Japan will accept cars and trucks built to US motor vehicle safety standards, without subjecting them to additional requirements – a potentially major step to selling more American-built vehicles in the country.
A centrepiece of the pact with Japan is the $550 billion pledge, which the official said was akin to a sovereign wealth fund under which Mr Trump himself could steer investments inside the US.
Final terms of the agreement still need to be enshrined in a formal proclamation. Legal particulars and other details surrounding the $550 billion investment pledge are still being hammered out, the official said.
The investment timeline is uncertain, and it is unclear whether Mr Trump could allocate the full sum during his term.
The source of the Japanese funding was also not immediately available. Japanese Prime Minister Shigeru Ishiba said the investment sum would reach as much as $550 billion and would partly come in the form of loan guarantees.
Mr Trump played the role of closer after eight rounds of negotiations, pressing for more concessions and securing better terms for the US in that final Oval Office meeting with Japan's chief trade negotiator, Ryosei Akazawa, the official said. Commerce Secretary Howard Lutnick and Treasury Secretary Scott Bessent joined in the final talks.
Mr Trump has a track record of making last-minute demands in talks, including before the US inked its agreement with the UK.
Previously, US and Japanese officials were said to be discussing a fund of around $400 billion, with profits equally split. But under the terms hashed out in the Oval Office meeting, Japan agreed to provide $550 billion to invest in projects in the United States that the president deems important, through vehicles returning 90 per cent of the profits to the US.
A photo shared by Mr Trump's aide Dan Scavino on social media shows the initial figure was $400 billion, which appears to have been crossed out by Mr Trump and replaced by a handwritten $500 billion, before they settled at $550 billion.
Japan has also agreed to buy 100 Boeing Co. aircraft, boost rice purchases by 75 per cent and buy $8 billion in agricultural and other products while hiking defence spending with American firms to $17 billion annually, from $14 billion, the senior official said.
The country will also participate in an LNG pipeline project in Alaska, the official said, an apparent reference to a long-stalled $44 billion venture designed to export the state's gas around the globe. Mr Trump told lawmakers at the White House Tuesday evening that Japan is 'forming a joint venture' on a proposed Alaskan LNG project. 'They're all set to make that deal now,' Mr Trump said.
'Japan and the US have been conducting close negotiations with our national interests on the line,' Ishiba said in Tokyo. 'The two nations will continue to work together to create jobs and good products.'
Mr Trump also pledged to give Japan a safety clause on forthcoming sectoral tariffs, including levies expected on semiconductors and pharmaceutical drugs – effectively agreeing to not treat the country worse than any other nation when it comes to those goods, the official said.
In effect, that means Japan will be guaranteed whatever the lowest global rate is on those tariffs. US negotiators have so far resisted efforts to make exceptions and carveouts for sectoral tariffs, though the UK deal included a plan for limited relief from levies on steel.
Shares in Japanese carmakers jumped in Tokyo on reports the auto sector rate would be lowered from 25 per cent to 15 per cent for Japan, with Toyota Motor Corp. rising more than 11 per cent.
Mr Trump has repeatedly zeroed in on auto trade as he criticises trade imbalances with the country. Around 80 per cent of Japan's trade surplus with the US is in cars and auto parts.
The yen fluctuated in early Tokyo trading, before strengthening again after the report from public broadcaster NHK on the auto tariffs. Japanese stocks on the Topix benchmark index rose, led by automakers, and US equity futures edged higher. – Bloomberg
