In a major development on the global trade front, former U.S. President Donald Trump has announced what he calls a “historic” trade agreement with Japan.
In a post on his own social media platform, Truth Social, on Tuesday, Trump stated that under the agreement, Japan will invest $550 billion in the United States, with the U.S. expected to receive 90% of the returns from that investment.
“We have concluded a massive deal with Japan—perhaps the largest in history,” Trump wrote. “Under my directive, Japan will invest $550 billion in the United States.” He further claimed that the deal would generate hundreds of thousands of new jobs across the country.
As part of the agreement, the U.S. market will open up further to Japanese automobiles, rice, and agricultural goods. Additionally, Trump revealed plans for a joint U.S.-Japan venture to extract liquefied natural gas (LNG) in Alaska.
Japanese Prime Minister Shigeru Ishiba responded by saying that his government will carefully review the details of the deal, though he believes it aligns with Japan’s national interest. It’s worth noting that his party recently lost its majority in the upper house of parliament.
Under the terms of the deal, the United States will impose a 15% tariff on Japanese exports—down from the previous 25% rate. Analysts see this reduction as a positive signal for Japan.
William Chou, Deputy Director at the Hudson Institute, remarked, “A 15% reciprocal tariff brings some relief, but questions remain about whether exemptions will apply to the steel and semiconductor sectors.”
U.S. Treasury Secretary Scott Bessent hailed the agreement as “historic,” saying, “We are reaffirming our commitment to a longstanding alliance. Under President Trump’s leadership, the U.S. and Japan are entering a new ‘Golden Age’ of cooperation.”
Following Trump’s announcement, shares of Japanese automobile companies surged. Mazda stock rose by over 17% on Wednesday morning, while Toyota, Nissan, and Honda saw gains ranging from 8.5% to 12%. Japan’s Nikkei 225 index also jumped nearly 3%.
In 2024, the U.S. imported approximately $148.2 billion worth of goods from Japan and exported around $79.7 billion in return. Experts believe this agreement could help narrow the trade imbalance between the two countries.
Economist Brian Jacobsen commented, “Just a year ago, a 15% tariff would have seemed unthinkable. Today, it’s a reason to breathe a sigh of relief. While full details of the agreement have not yet been released, this appears to be the Trump administration’s most significant trade achievement to date.”
Source: Al Jazeera.