Trump Secures Landmark Trade Deal with Japan, Easing Auto Tariffs and Unlocking $550 Billion Investment Package

Washington, D.C., July 23 – In a major development on the global trade front, U.S. President Donald Trump has announced a far-reaching trade agreement with Japan, easing tariffs on Japanese auto imports and averting impending duties on a range of goods. In return, Japan has pledged a $550 billion investment and loan package aimed at strengthening U.S.-bound supply chains.

The agreement, which Trump described as the “largest trade deal in history” on his Truth Social platform, marks a pivotal moment in his administration’s international trade policy and adds to a growing list of bilateral frameworks pursued since the imposition of sweeping global tariffs in April.

Under the terms of the deal, tariffs on Japanese automobiles—representing over 25% of Japan’s exports to the U.S.—will be reduced to 15%, down from a total of 27.5%. Additional duties scheduled to take effect on Japanese goods from August 1 will also be lowered to 15%, from the previously slated 25%.

The announcement triggered a surge in Japan’s equity markets. The Nikkei 225 jumped nearly 4%, its strongest performance in a year, led by auto manufacturers. Shares of Toyota surged over 14%, while Honda gained almost 11%.

"This is a very exciting time for the United States," Trump posted, adding that the deal cements America's “great relationship” with Japan.

Japan’s top trade negotiator, Ryosei Akazawa, echoed the sentiment, posting “#MissionComplete” on social media following his meeting with Trump at the White House. However, Akazawa clarified that the deal does not include Japanese exports of steel and aluminum, which remain subject to 50% tariffs.

The U.S.-Japan trade relationship is among the world's largest, with two-way trade exceeding $230 billion in 2024. Japan maintains a trade surplus of nearly $70 billion with the U.S. and ranks as its fifth-largest trading partner, according to U.S. Census Bureau data.

As part of the agreement, Japan’s government-backed institutions will provide loans and guarantees amounting to $550 billion to facilitate investments in critical sectors such as pharmaceuticals and semiconductors. The package is intended to help Japanese firms develop resilient supply chains within the U.S.

Japan has also agreed to increase its purchases of U.S. agricultural products, including rice. However, officials in Tokyo have emphasized that the agreement does not compromise domestic agricultural interests.

“This is the lowest tariff rate ever applied to any country with a trade surplus with the U.S.,” remarked Japanese Prime Minister Shigeru Ishiba, who, despite speculation around his resignation following a recent electoral setback, dismissed such reports as "completely unfounded."

Bank of Japan Deputy Governor Shinichi Uchida welcomed the deal as a “significant step forward,” noting that it alleviates uncertainty surrounding Japan’s economic outlook. Analysts had previously warned that the tariff hikes could have tipped the Japanese economy—currently the fourth largest in the world—into a technical recession.

The announcement also had ripple effects across international markets, lifting shares of European and South Korean automakers, amid optimism that similar deals might follow. However, the agreement drew criticism from U.S. automakers, who argue the deal puts them at a disadvantage.

"Any agreement that imposes lower tariffs on Japanese vehicles with little or no U.S. content, while maintaining higher tariffs on North American-built vehicles with substantial U.S. input, is a bad deal for American manufacturers and workers," said Matt Blunt, President of the American Automotive Policy Council, representing General Motors, Ford, and Stellantis.

Photographs from the Akazawa-Trump meeting showed a document labeled “Japan Invest America”, with an original figure of $400 billion crossed out and "$500" handwritten above it, suggesting last-minute adjustments to the investment commitments.

Speaking from the White House, President Trump also expressed optimism over potential U.S.-Japan cooperation on a long-delayed Alaska gas pipeline project, a strategic infrastructure goal of his administration.

With an August 1 deadline for new global tariffs looming, Trump and his advisors are pushing to finalize several outstanding trade negotiations. Framework agreements have been announced with Britain, Vietnam, and Indonesia, while tariff escalations with China have been temporarily paused pending further negotiations.

Next on the agenda: a high-level meeting with European Union negotiators, scheduled to take place in Washington this Wednesday.