Trump Announces Landmark Trade Agreement with Japan, Promises Job Creation
Historic Trade Deal with Japan
On Tuesday evening, US President Donald Trump revealed the finalization of what he described as a "massive deal" with Japan, potentially the largest trade agreement in history. In a post on Truth Social, Trump declared, "We just completed a massive Deal with Japan, perhaps the largest Deal ever made. Japan will invest, at my direction, $550 Billion Dollars into the United States, which will receive 90% of the Profits.
This Deal will create Hundreds of Thousands of Jobs — There has never been anything like it." Following this announcement, Trump addressed Republican members of Congress at a reception in the East Room of the White House, stating, "I just signed the largest trade deal in history; I think maybe the largest deal in history with Japan.
They had their top people here, and we worked on it long and hard. And it’s a great deal for everybody." According to reports, the agreement includes a 15% "reciprocal" tariff on Japanese goods exported to the US. Trump emphasized that the US would "receive 90% of the profits." This agreement signifies a breakthrough after months of stalled negotiations, especially as Trump’s August 1 deadline for increased tariffs approached. The Japan deal was one of three significant trade announcements made that day.
Trump noted that Japan would open its market to US exports, including automobiles and agricultural products. "Perhaps most importantly, Japan will open their Country to Trade including Cars and Trucks, Rice and certain other Agricultural Products, and other things. Japan will pay Reciprocal Tariffs to the United States of 15%." He described this as a pivotal moment for US-Japan relations, stating, "This is a very exciting time for the United States of America, and especially for the fact that we will continue to always have a great relationship with the Country of Japan. Thank you for your attention to this matter!" Trade in rice had been a contentious issue during the negotiations, with Trump previously stating, "They won’t take our RICE, and yet they have a massive rice shortage," on Truth Social.
Reports indicate that Japan purchased $298 million worth of US rice last year and $114 million from January to April this year. A 2021 report from the Office of the United States Trade Representative highlighted that Japan’s strict importation and distribution system for rice limits US exporters' access to Japanese consumers. Automobiles, a key sector of Japan's economy, were also central to the discussions. Trump remarked earlier this month, "We didn’t give them one car in 10 years." However, data from the Japan Automobile Importers Association revealed that Japan imported 16,707 American-made vehicles last year.
US Treasury Secretary Scott Bessent met with Japanese Prime Minister Shigeru Ishiba in Tokyo last week, expressing optimism about reaching an agreement. In a post on X, Bessent stated, "A good deal is more important than a rushed deal, and a mutually beneficial trade agreement between the United States and Japan remains within the realm of possibility." Mary Lovely, a trade expert at the Peterson Institute, noted that the deal alleviates tariff pressure on Japan.
"The ‘deal’ relieves Japan of the 25% tariff threat and puts it potentially in a competitive position vis a vis similar US suppliers," she explained. "The US is unlikely to sell many cars and trucks… from the US. Agricultural liberalization (is) a win for Japanese consumers, assuming they are willing to try excellent California rice." Japan is one of the US's most significant trading partners, ranking as the fifth-largest source of imports.
Last year, Japan exported $148 billion worth of goods to the US, including cars, car parts, and agricultural machinery. Prior to Trump’s intervention, goods from Japan faced a 24% reciprocal tariff, which was paused for 90 days in April. Since then, they have been subject to a minimum 10% tariff. Earlier this month, Trump warned Prime Minister Ishiba in a letter that he could impose a 30% tariff starting August 1.
In exchange, the US exported $80 billion worth of goods to Japan last year, including oil, gas, pharmaceuticals, and aerospace products. While Japan is a close ally of the US, its primary trading partner remains China. The Trump administration has been urging allies to reduce trade with China as a condition for securing trade agreements with Washington. This latest agreement follows a 2019 expanded trade pact between the two nations that took effect the following year, allowing for more goods to be shipped duty-free. Additionally, Japan holds $1.1 trillion in US Treasury securities, making it the largest foreign creditor to the United States.