Trump announces ‘massive’ trade deal with Japan featuring 15% tariff

U.S. President Donald Trump on Tuesday announced what he called a "massive" trade agreement with Japan, reducing a previously threatened 25% tariff to 15%, just ahead of an August 1 deadline.

Trump has warned that dozens of countries could face punitive tariffs if they fail to reach trade deals with the United States by next month. So far, formal agreements have only been finalized with Japan, the United Kingdom, Vietnam, the Philippines, and Indonesia, with negotiations ongoing with other partners.

“We just completed a massive deal with Japan—possibly the largest deal ever made,” Trump declared on his Truth Social platform.

According to Trump, the agreement includes a commitment by Japan to invest $550 billion in the U.S. under his direction, with the U.S. retaining 90% of the profits. He did not elaborate on the specifics of this investment but claimed the deal would generate “hundreds of thousands of jobs.”

Japanese imports into the U.S. were already subject to a 10% tariff, which was set to rise to 25% if no agreement had been reached by August. Additionally, Japanese automobiles—which represent 8% of the country's employment—were already facing a 25% tariff, while steel and aluminum imports were subject to duties of 50%.

Japanese Prime Minister Shigeru Ishiba confirmed Wednesday in Tokyo that the auto tariff would now be reduced to 15%.

"We are the first country in the world to secure a reduction in auto and auto parts tariffs, with no volume restrictions," Ishiba said, calling it a major achievement for a country with a trade surplus with the U.S.

Following the announcement, Japanese auto stocks surged on Wednesday—Toyota shares jumped over 12%.

In June, shipments of Japanese cars to the U.S. had dropped 26.7%, raising concerns of a potential recession in Japan. Vehicles accounted for roughly 28% of Japan’s ¥21.3 trillion ($142 billion) in exports to the U.S. last year.

Trump has frequently criticized Japan for its low sales of American-made vehicles—only a few hundred are sold annually—while millions of Japanese vehicles are bought by American consumers.

As part of the new agreement, Trump also pushed Japan to increase imports of rice, oil, and natural gas. While rice is a politically sensitive topic in Japan, Trump claimed that Japan had agreed to open its markets to American cars, trucks, rice, various agricultural products, and more.

However, Prime Minister Ishiba insisted that Japan’s agricultural sector had not been compromised and reiterated that the deal preserves domestic protections.

Facing pressure to deliver on his promise of multiple trade deals before the August deadline, Trump also announced Tuesday that an agreement had been finalized with the Philippines, which will now face a 19% tariff on its exports.

The White House also unveiled the terms of a deal with Indonesia, under which it would ease restrictions on critical mineral exports and face a reduced 19% tariff—down from a threatened 32%. However, any Indonesian goods suspected of being re-exported to evade higher tariffs will face a steep 40% duty, according to a U.S. official.

Meanwhile, after months of tit-for-tat trade escalation with China, both countries have agreed to a temporary easing of tariffs, with another round of negotiations scheduled next week in Stockholm.

Since returning to office in January, Trump has imposed a sweeping 10% tariff across the board—impacting both allies and rivals—alongside higher duties on steel, aluminum, and automobiles. Legal challenges to the broad application of these tariffs are ongoing.