Donald Trump Signs Order Sealing Japan Trade Deal With 15% Tariff Rate
The trade deal, including a promise that Japan will create a $550 billion US investment fund, was reached in July, but had yet to be formalised as Washington and Tokyo haggled over its terms
US President Donald Trump signed an executive order on Thursday implementing his trade agreement with Japan, with a maximum 15% tariff on most of its products, including automobiles and parts.
The deal, including a promise that Japan will create a $550 billion US investment fund, was reached in July, but had yet to be formalised as Washington and Tokyo haggled over its terms. Japan’s top trade negotiator, Ryosei Akazawa, who was in Washington this week for talks, met with Trump on Thursday, according to a US official.
Trump’s directive prevents the stacking of Trump’s country-specific duties on top of existing levies. The 15% charge will apply retroactively to most products shipped starting August 7, the date on which the US president’s escalated tariffs on dozens of trading partners took effect.
Relief for aerospace and automobile imports will become effective within seven days, according to the order. Japan had pushed the US to follow through on an agreement to reduce auto tariffs from 27.5% to provide relief to a sector crucial to that country’s economy.
Japanese auto shares climbed in Tokyo after the signing of the order. Mazda Motor Corp. and Nissan Motor Corp., which make over 50% of their revenues in North America, rose over 5%. Toyota Motor Corp. climbed as much as 3.5%.
Under Thursday’s agreement, the US will also lift certain tariffs on aircraft and aircraft parts as well as generic pharmaceuticals, ingredients and precursor chemicals.
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US Commerce Secretary Howard Lutnick and Akazawa signed memorandums of understanding on Thursday evening to solidify the agreement. The Japanese government had been pressing to finalize the tariff deal for weeks.
But the officials offered no additional details on the $550 billion investment fund — a key pillar of the deal that has been shrouded in questions with few specifics on its funding and the trading partners describing the mechanism differently.
“This is historic in that Japan has committed $550 billion to the president of the United States for him to invest in the infrastructure of the national and economic security of the United States,” Lutnick said at the signing ceremony. “Additionally, Japan has worked closely with us to expand access to their markets for America, and we are, we are really just thrilled to be doing it together.”
Trump has previously cast the $550 billion as money that his administration could “invest as we like” with 90% of the profits being given to the US. Japan Prime Minister Shigeru Ishiba had said Tokyo would offer a combination of investments, loans, and loan guarantees, characterizing it as a way to back up Japanese firms’ US projects.
Japan’s Akazawa repeated that stance on Thursday in Washington while he said he expects it to take up to two weeks for the executive order to take effect.
“Nothing about the July 22 agreement has changed at all,” Akazawa said. “In short, we will provide investments, loans and loan guarantees for up to $550 billion. That remains the same.”
