The US has agreed a trade agreement with Japan that will impose 15 percent rates for goods imported into America from the fourth largest economy in the world.
The 15 percent levy is lower than the 25 percent President Donald Trump had threatened in a letter earlier this month, but higher than the 10 percent rate that had been in force while the negotiated countries.
The higher levies indicate that Trump is willing to maintain increased rates at large American allies while accelerating his aggressive trade policy. Dozens of countries are confronted with a deadline of August 1 to reach a deal, after which Trump said that he will impose higher rates.
The US President said that Japan would “open” his markets for American cars and rice, which had hurled points during the negotiations between the narrow allies.
“We have just closed a huge deal with Japan, perhaps the biggest deal ever closed,” Trump posted late on his social platform on Tuesday. “Japan will open their country to act, including cars and trucks, rice and certain other agricultural products and other things. Japan will pay mutual rates at the United States of 15%.”
Japanese Prime Minister Shigeru Ishiba said his country would have reduced car rates to 15 percent without any quota about the number of input. “We have a reduction in rates on cars and car parts can reach without quantitative limitations, prior to the rest of the world,” he said.
An American officer confirmed that the US would lower the rate on the Japanese cars and car parts to 15 percent.
The main negotiator of Japan Ryosei Akazawa said that steel and aluminum rates of 50 percent, as well as defense expenses, were not included in the trade agreement.
The automotive sector is a pillar of the Japanese economy and makes the majority of its $ 63 billion commercial surplus with the US.
Shares in Japanese car producers rose, with Toyota and Honda that gathered more than 14 and 11 percent respectively, while Subaru and Mazda both won more than 17 percent. The yen weakened 0.2 percent to ¥ 146.9 against the dollar after the announcement of Trump, after they were strengthened earlier in the day. The Benchmark Topix from Japan rose by 3.1 percent in Tokyo Trading.
Akazawa has held eight rounds of conversations with his counterparts, including the American trade secretary Howard Lutnick and American Minister of Finance Scott Bessent, in an attempt to close a deal.
Dalep Singh, vice-chairman of asset manager PGIM and deputy national security adviser among former President Joe Biden, said that the deal was “absolutely a relief” because the two nations could “be” entangled in a zero-Som negotiation of cars and agriculture “.
Japan is the largest economy to close a deal with the US since Trump announced his “reciprocal” rates in April.
Earlier this summer, the US announced a deal with the UK and last week said it had reached an agreement with Indonesia. It also agreed to de-escalate rates with China and has announced deals with Vietnam and the Philippines, although no written text has been produced for both.
Although Trump said that the US had a “great relationship” with Japan, the trade agreement comes because the relations between the two allies are tense about defense expenditure, which Washington drives Tokyo to rise.
Trump said that Japan would invest more than half a trillion dollar in the US, without providing details about who would make the investment and over what time frame.
“Japan will invest in my direction, $ 550 billion dollars in the United States, which will receive 90% of the profit,” he said, claiming that the inflow would create hundreds of thousands of jobs.
ISHIBA said that Japan’s investments in the US included in areas that are relevant to national security such as semiconductors, steel, shipbuilding, aviation, energy and artificial intelligence.
In comments in the White House after the announcement, Trump added that the US and Japan would enter into a liquid natural gas joint venture in Alaska.
“I told Japanese trade representatives …” Now we’re going to conclude another [deal]”” Said Trump. ‘They form a joint venture with us in Alaska. . . for the LNG. “
American car groups reacted carefully to the news. “Every deal that charges a lower rate for Japanese imports with virtually no American content than the rate imposed on North American-built vehicles with high American content, is a bad deal for American industry and American car employees,” said Matt Blunt, president of the American Automotive Policy, Die Ford, GM and Ford, GM and Ford, GM and Ford, GM and Stellantis.
The trade agreement comes days after the Liberal Democratic Party of Ishiba had had a setback in an election of the Heerhuis that seriously weakened and adopt legislation to the country.
Japanese media said that Ishiba, who will meet three former prime ministers on Wednesday, would announce his intention to resign next month.
Additional reporting by William Sandlund in Hong Kong
