US President Donald Trump on Tuesday announced a trade deal with Japan, cutting US tariffs on Japanese cars to 15% and opening Japanese markets to American goods, in what he described as “perhaps the largest deal ever made.”
Trump added that under the deal, Japan has committed to invest US$550 billion in the US. “America will receive 90% of the profits,” Trump said on his Truth Social platform, claiming the deal would create “hundreds of thousands of jobs.” The US President further noted that the deal will open Japan’s market to goods like US cars and trucks, rice and other agricultural products.
The Japanese government confirmed that it has struck a deal with the US, which is expected to be formalised shortly in an executive order by the US President. The reduction of US auto tariffs from 25% to 15% is a major shift for an industry that accounts for nearly a third of Japan’s exports and supports 1 in 10 jobs in the country. Automobiles made up 28.3% of Japanese exports to the US last year. According to initial media reports, the agreement does not include Japanese exports of steel and aluminium that are still subject to a 50% tariff.
Deal with Indonesia
The Japan deal follows the announcement of a parallel agreement with Indonesia, announced by the White House. Under the agreement, Jakarta will eliminate 99% of tariffs on US goods, while Washington will cut tariffs on Indonesian imports to 19%, Washington said. Both sides also pledged cooperation on digital trade, cross-border data flows, and critical minerals.
The White House further noted that the two sides have also agreed on commercial deals on:
- Procurement of aircraft currently valued at US$3.2 billion
- Purchase of agricultural products, including soybeans, soybean meal, wheat, and cotton, with an estimated total value of US$4.5 billion
- Purchases of energy products, including liquefied petroleum gas, crude oil, and gasoline, with an estimated value of US$15 billion.