Trump says Japan deal reached with tariff rate set at 15%

President Donald Trump reached a trade deal with Japan that will impose 15% tariffs on US imports from the country, including its auto sector, while creating a $550 billion fund backed by the Japanese to make investments in America.

The agreement, touted by Trump after he secured breakthroughs in a final 75-minute Oval Office meeting Tuesday with Japan’s top trade negotiator, spares the key US ally from a threatened 25% tariff that was set to take effect next week.

“They had their top people here and we worked on it long and hard, and it’s a great deal for everybody,” Trump said at a White House event Tuesday evening.

Under the deal, Japanese automobiles and parts would be subjected to the same 15% rate as other of the country’s exports, according to a senior US administration official, speaking on condition of anonymity to outline the agreement. In return, Japan will accept cars and trucks built to US motor vehicle safety standards, without subjecting them to additional requirements — a potentially major step to selling more American-built vehicles in the country.

A centerpiece of the pact with Japan is the $550 billion pledge, which the official said was akin to a sovereign wealth fund under which Trump himself could steer investments inside the US. 

Final terms of the agreement still need to be enshrined in a formal proclamation. Legal particulars and other details surrounding the $550 billion investment pledge are still being hammered out, the official said. 

The investment timeline is not certain, and it’s not clear whether Trump would be able to allocate the full sum during his term. 

The source of the Japanese funding was also not immediately available. Japanese Prime Minister Shigeru Ishiba said the investment sum would reach as much as $550 billion and would partly come in the form of loan guarantees.

Trump played the role of closer after eight rounds of negotiations, pressing for more concessions and securing better terms for the US in that final Oval Office meeting with Japan’s chief trade negotiator, Ryosei Akazawa, the official said. Commerce Secretary Howard Lutnick and Treasury Secretary Scott Bessent joined in the final talks.

Trump has a track record of making last-minute demands in talks, including before the US inked its agreement with the UK. 

Previously, US and Japanese officials were said to be discussing a fund of around $400 billion, with profits equally split. But under the terms hashed out in the Oval Office meeting, Japan agreed to provide $550 billion to invest in projects in America the president deems important, through vehicles returning 90% of the profits to the US. 

A photo shared by Trump aide Dan Scavino on social media shows the initial figure was $400 billion, which appears to have been crossed out by Trump and replaced by a hand-written $500 billion, before they settled at $550 billion.

The official pointed to one hypothetical scenario of how the investments might work. The president could, for instance, select a semiconductor manufacturing project that could be built with Japanese funds, leased to operating companies and the resulting leasing profit divided 90-10 between the US and Japan.

Japan has also agreed to buy 100 Boeing Co. aircraft, boost rice purchases by 75% and buy $8 billion in agricultural and other products while hiking defense spending with American firms to $17 billion annually, from $14 billion, the senior official said. 

The country will also participate in an LNG pipeline project in Alaska, the official said, an apparent reference to a long-stalled $44 billion venture designed to export the state’s gas around the globe. Trump told lawmakers at the White House Tuesday evening that Japan is “forming a joint venture” on a proposed Alaskan LNG project. “They’re all set to make that deal now,” Trump said. 

“Japan and the US have been conducting close negotiations with our national interests on the line,” Ishiba said in Tokyo. “The two nations will continue to work together to create jobs and good products.”

Trump also pledged to give Japan a safety clause on forthcoming sectoral tariffs, including levies expected on semiconductors and pharmaceutical drugs — effectively agreeing to not treat the country worse than any other nation when it comes to those goods, the official said.

In effect, that means Japan will be guaranteed whatever the lowest global rate is on those tariffs. US negotiators have so far resisted efforts to make exceptions and carveouts for sectoral tariffs, though the UK deal included a plan for limited relief from levies on steel.

Shares in Japanese carmakers jumped in Tokyo on reports the auto sector rate would be lowered from 25% to 15% for Japan, with Toyota Motor Corp. rising more than 11%.

Trump has repeatedly zeroed in on auto trade as he criticizes trade imbalances with the country. Around 80% of Japan’s trade surplus with the US is in cars and auto parts.

The yen fluctuated in early Tokyo trading, before strengthening again after the report from public broadcaster NHK on the auto tariffs. Japanese stocks on the Topix benchmark index rose, led by automakers, and US equity futures edged higher. 

The deal with Japan comes hours after Trump announced he had reached an agreement with the Philippines, setting a 19% tariff on the country’s exports.The flurry of activity comes days before the president’s Aug. 1 deadline for imposing so-called “reciprocal” tariffs that will hit dozens of trading partners. 

Trump first announced the plan for sweeping tariffs on nearly every US trading partner in April, only to quickly put them on hold for 90 days amid market backlash in order to work out agreements. But that stretch saw the US finalize only a handful of deals and Trump instead moved to unilaterally impose rates on countries and blocs before the looming deadline.

While the US president and his advisers initially suggested they planned to hold concurrent talks with trading partners, Trump has shown little patience for back-and-forth negotiations, instead saying his preference was to just set rates for other economies. In recent weeks, he has sent a slew of letters setting tariff levels and is also moving ahead on industry-specific levies that will target sectors such as copper, semiconductors and pharmaceutical drugs. 

While talks continue with major economies including the European Union and India, Trump said some 150 smaller countries will be hit with a blanket rate of between 10 and 15%.

Trump originally threatened to place a 24% tariff on Japanese imports earlier this year, then nudged that up to 25% in a letter earlier this month. That suggested Akazawa’s repeated visits to Washington had failed to gain significant traction ahead of an election in Japan that saw Ishiba suffer another setback for his minority government.

Local media reports indicate the Japanese premier is linking his future to developments in the talks following the loss of his ruling coalition’s majority in the upper house.

The issue of automobiles had been a particular sticking point in trade negotiations between the two countries.

Japanese-based car companies have made significant plans to invest in the US, including Isuzu Motors Ltd.’s $280 million investment in a new facility in South Carolina, and Toyota’s $88 million commitment to boost production of hybrid vehicles.