US and Japan reach trade deal

A U.S. Steel plant in Braddock, Pa., May 17, 2022. The United States ran a $63 billion trade deficit with Japan last year, which President Trump has viewed as a sign of economic weakness. (Maddie McGarvey/The New York Times)

By Ana Swanson and River Akira Davis

President Donald Trump said earlier this week that he had reached a “massive” trade deal with Japan, helping to allay fears of heightened trade tensions between the United States and one of its closest Asian allies.

In a social media post Tuesday evening, the president wrote that Japan had agreed to open its country to imports of American cars, trucks, rice and other agricultural products, as well as invest $550 billion into the United States. He said that Japanese exports to the United States would be charged a tariff of 15%, lower than the 25% tariff he had threatened against the country’s products if Japan did not strike a deal.

The deal will also lower the tariff the United States charges on Japanese auto exports, which are subject to a separate tariff schedule, to 15%, including a preexisting tariff of 2.5%, according to U.S. and Japanese government officials speaking on the condition of anonymity to discuss negotiations. That will come as a relief to Japanese carmakers, which, like manufacturers in other countries, have faced an additional 25% tariff since April.

Japanese Prime Minister Shigeru Ishiba told reporters in Tokyo on Wednesday morning that he had received an initial report about the agreement from Ryosei Akazawa, Japan’s chief trade negotiator, who is in Washington. “I will receive a report on the details in the future and examine them carefully,” Ishiba said.

In a social media post, Akazawa said: “Mission accomplished.”

Details of what the two sides had agreed to were not immediately available, but an agreement with Japan would be the most significant of the preliminary trade agreements that the Trump administration has announced thus far.

In a bid to rework America’s trading relationships, Trump has been threatening stiff tariffs against dozens of countries globally to try to encourage them to strike trade deals with the United States. The White House says that it has reached framework agreements with Britain, Vietnam, the Philippines and Indonesia, in addition to a trade truce that rolled back tariffs with China.

These agreements appear to be rough outlines of deals, where some of the provisions still need to be negotiated. For Vietnam, it remains unclear whether the country’s leaders have actually agreed to the terms that Trump announced.

Speaking in Washington on Tuesday night, the president said the United States and Japan had worked “long and hard” on the agreement and that it would be “a great deal for everybody.” He also said that administration officials would be meeting again Wednesday with representatives from the European Union, as the bloc also tries to stave off steep tariffs that would begin Aug. 1.

“I was sitting there, screaming back and forth with Japan, and somebody said, ‘Can you imagine Biden doing this?’” Trump told a crowd gathered at the White House. “I don’t think so. There would be no negotiation. We’d just be ripped off, like we have been.”

Japan and the United States had struggled for months to reach a trade agreement. One reason for the slow progress was that Japan had been heading toward a national election, ahead of which voters indicated that they did not want the country to make big concessions in pursuit of a trade deal. Those elections were held in Japan on Sunday.

Ishiba had used ongoing U.S.-Japan trade negotiations as justification for remaining in office after his party suffered major losses in parliamentary elections held last weekend. On Monday, Ishiba dispatched Akazawa to Washington for an eighth round of trade negotiations.

Trump’s existing tariffs on foreign cars, Japan’s biggest export to the United States, had hung over the negotiations. Trump has often railed against Japanese auto exports, saying that the country ships many more cars to the United States than it buys. Japanese officials had been refusing to accept any deal that didn’t remove the already-in-place 25% tariffs on its cars.

Automobiles and auto parts are by far Japan’s largest export to the United States. Since the auto tariffs went into effect in April, Japanese automakers including Toyota, Honda and Nissan have warned they are losing billions of dollars’ worth of profits. Japanese officials likened the auto tariffs to a “national crisis.”

In trading in Asia on Wednesday, Japanese auto stocks surged after reports that car exports would be charged a lower tariff. Toyota shares climbed more than 11% in early trading, while Nissan and Honda both rose more than 8%. Japan’s Nikkei 225 benchmark index rose more than 3%.

Without a deal, Japan had been facing the prospect of a 25% tariff on its exports to the United States beginning Aug. 1, which Trump communicated in a letter to the country this month.

“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 wrote in a post on Truth Social.

Japan was one of the United States’ largest sources of imports in 2024, trailing only Mexico, Canada, China and Germany. It’s also a major export market for the United States. The United States ran a $63 billion trade deficit with Japan last year, which Trump has viewed as a sign of economic weakness.

Trump negotiated a limited trade deal with Japan in his first term, in which Japan agreed to reduce Japanese barriers to American beef, pork, wheat, cheese and other products, while the United States cut tariffs on Japanese turbines, machine tools, bicycles, flowers and other goods. The two countries also reached an agreement on digital trade, in which they agreed to allow for the free flow of data, among other provisions.