Trump Announces Major Japan Trade Deal, Cuts Auto Tariff to 15%

Aerial view of automobiles parked at the Port of Baltimore’s import lot on May 7, 2025, in Baltimore, Maryland.

US President Donald Trump announced a significant trade deal with Japan on Tuesday, reducing a threatened 25 percent tariff to 15 percent just before an August 1 deadline.

Trump had warned that countries failing to reach agreements with the US by next month would face punitive tariffs. So far, formal deals have been announced with Japan, Britain, Vietnam, the Philippines, and Indonesia, while talks with other partners continue.

On his Truth Social platform, Trump described the agreement as a “massive deal,” saying Japan would invest $550 billion into the US, with 90 percent of the profits returning to America. He added that the deal is expected to create hundreds of thousands of jobs, though details of the investment plan remain unclear.

Before the deal, Japanese imports to the US faced a 10 percent tariff that was set to rise to 25 percent on August 1. The US had already imposed 25 percent tariffs on Japanese autos, which employ about eight percent of Japan’s workforce, as well as 50 percent duties on steel and aluminum.

Japanese Prime Minister Shigeru Ishiba confirmed that the auto tariff has been cut to 15 percent. He described the agreement as a major achievement, highlighting that Japan became the first country to reduce tariffs on automobiles and parts without volume limits.

The announcement boosted Japanese auto stocks, with Toyota shares soaring more than 12 percent. However, US-bound shipments of Japanese cars fell 26.7 percent in June, raising concerns of a possible technical recession in Japan. Vehicles made up roughly 28 percent of Japan’s $142 billion exports to the US last year.

Trump also urged Japan to increase imports of US rice, oil, and gas. Rice imports are a sensitive topic in Japan, where the government had previously resisted concessions. Ishiba reassured that the deal does not compromise Japan’s agricultural sector.

The announcement follows Trump’s promise to finalize several trade deals before the August tariff deadline. Earlier on Tuesday, he announced a deal with the Philippines that sets tariffs at 19 percent, and the US also detailed a pact with Indonesia that reduces tariffs from 32 to 19 percent while tightening rules on transshipped goods.

After escalating tariff tensions with China, the two economic powers agreed to temporarily lower tariffs, with further negotiations scheduled soon.

Since returning to office in January, Trump has imposed broad 10 percent tariffs on many countries alongside higher duties on steel, aluminum, and autos, despite ongoing legal challenges.