President Donald Trump on Tuesday night unveiled what he described as the “largest trade deal in history” between the United States and Japan, a sweeping new agreement that aims to reshape trade relations between two of the world’s leading economies.
Speaking during a reception with Republican lawmakers at the White House, Trump announced the finalization of the long-anticipated deal, saying, “We worked on it long and hard… and it’s a great deal for everybody.”
Under the new framework, Japanese exports to the U.S., including automobiles and car parts, will be subject to a 15% “reciprocal” tariff, significantly lower than the 25% rate applied to other major vehicle-exporting countries since April. In return, Japan will invest $550 billion into the U.S. economy, with Trump stating the U.S. will receive “90% of the profits.” The investment will reportedly target key sectors such as semiconductors and pharmaceuticals.
“This deal will create hundreds of thousands of jobs,” Trump said on Truth Social. “Japan will open their country to trade, including cars and trucks, rice, and other agricultural products, and will pay reciprocal tariffs of 15%.”
In Tokyo, Prime Minister Shigeru Ishiba called the agreement “the lowest figure to date for a country that has a trade surplus with the United States,” expressing optimism about its long-term economic benefits. Tariff negotiator Ryosei Akazawa said Japan is now the “first in the world to reduce tariffs on automobiles and parts without volume limits.”
While the agreement represents a significant easing of trade tensions, some sticking points remain. Steel and aluminum exports from Japan are still subject to a 50% U.S. tariff. Discussions on those and other unresolved issues are ongoing.
The deal comes after months of tense negotiations. As recently as June, Trump called the Japanese “tough” negotiators. But relations thawed following a visit to Tokyo by Treasury Secretary Scott Bessent, who said a “mutually beneficial agreement” was within reach.
Rice imports, a longstanding source of contention, were a key element of the final agreement. Japan purchased $298 million worth of U.S. rice last year but had faced criticism from U.S. officials over restrictive trade practices. The new deal is expected to increase access for American rice producers while, according to Akazawa, protecting Japanese farmers.
Trade analysts say the agreement also protects Japan from looming tariff hikes. “It relieves Japan of the 25% tariff threat and puts it in a competitive position,” said Mary Lovely of the Peterson Institute for International Economics.
Beyond trade, Trump said the U.S. and Japan are nearing a deal to co-invest in a proposed natural gas pipeline in Alaska, further signaling closer economic ties.
Japan is America’s fifth-largest source of imports, shipping $148 billion worth of goods to the U.S. last year, including cars, car parts, and industrial equipment. The U.S., in turn, exported $80 billion in goods to Japan, with energy, aerospace, and pharmaceuticals topping the list.
The deal builds on a 2019 U.S.–Japan trade agreement and marks a strategic win for Trump amid efforts to isolate China economically. With Japan holding over $1.1 trillion in U.S. Treasuries, the country remains a vital partner in financing America’s debt, giving Tokyo considerable leverage in talks.
As the agreement heads toward implementation, both governments say further collaboration is expected on remaining trade issues in the coming months.
Written By Rodney Mbua
