US, Japan Ink Trade Deal: Trump Cuts Tariff But Relief For Auto Makers Unlikely

The US and Japan reached a trade agreement reducing tariffs on Japanese goods from a potential 25% to 15%, though details on auto tariffs were initially unclear.

The announcement boosted Japanese stocks, particularly automakers, and strengthened the yen.

Source : X/@WhiteHouse

The US and Japan have struck a deal that will decrease the hefty tariffs Trump had threatened to impose on goods from its Asian ally, announced Donald Trump on Tuesday. 

The agreement includes a 15 per cent tariff on all goods imported from Japan, down from a proposed 25 per cent. "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," Trump said in a post on Truth Social. 

While Trump revealed a few details from the deal, he made no mention of easing tariffs on Japanese automobiles, which make up over a quarter of all the country's exports to the US and are subject to a 25 per cent tariff. The deal has slashed the auto tariff to 15 per cent, reported Reuters, quoting officials briefed on the agreement. 

The two-way trade between the US and Japan reached nearly $230 billion last year, with Japan running a trade surplus of nearly $70 billion. According to the US Census Bureau, Japan is the fifth-largest US trading partner. 

Following the announcement, the stocks soared in Japan, led by gains in automakers including Honda, Toyota, and Nissan, all gaining 8 per cent or more, and US equity index futures gains were lowered. The yen also strengthened against the dollar. 

Japanese Prime Minister Shigeru Ishiba said on Wednesday that he had received an initial report from his trade negotiator in Washington but declined to comment on the details of the negotiations. 

Ishiba is under immense political pressure in his country after his ruling coalition was set back by losing control of the upper house in an election on Sunday.