Trump lowers Japan's tariff rate to 15%, says Tokyo to invest $550 bn in US

US President Donald Trump on Wednesday (IST) said that he has reached a trade deal with Japan, bringing down the tariff rate imposed on Japanese goods from 25 per cent to 15 per cent.

Trump announced this on his private social media platform, Truth Social. He said, "We just completed a massive Deal with Japan, perhaps the largest Deal ever made. Japan will invest, at my direction, $550 Billion Dollars into the United States, which will receive 90% of the Profits."

He further went on to claim that this trade deal with Japan "will create Hundreds of Thousands of Jobs — There has never been anything like it. Perhaps most importantly, Japan will open their Country to Trade including Cars and Trucks, Rice and certain other Agricultural Products, and other things. Japan will pay Reciprocal Tariffs to the United States of 15%."

At a White House event, Trump also hinted at signing a joint venture deal with Japan to export liquefied natural gas from Alaska, Bloomberg reported.

Japan's reaction to lower tariff announcement

Bloomberg report citing public broadcaster NHK said Washington could also bring down rates on the auto sector to 15 per cent. Shares in Japanese carmakers jumped soon after the announcement, with Toyota Motors rising more than 11 per cent. Japanese stocks on the Topix benchmark index rose as much as 2.6 per cent and US equity futures edged higher.

Prime Minister Shigeru Ishiba said, "Japan and the US have been conducting close negotiations with our national interests on the line", adding that the two nations will continue to work together to create jobs and good products.

Trump sends new tariff rate letter to Japan

The recent deal marks a shift in Trump's stance and comes weeks after he sent out a letter to Japan and South Korea, informing them of new tariff rates. Earlier on July 7, the US President cited persistent trade deficit with Japan and South Korea as the reason for charging them a 25 per cent tariff, which will come into effect on August 1, 2025.

In the letter addressed to Japanese Prime Minister Shigeru Ishiba, Trump warned the country against retaliatory measures and stated, "If for any reason you decide to raise your Tariffs, then, whatever the number you choose to raise them by, will be added onto the 25% that we charge.”

He also added that these tariffs may be modified upward or downward, depending on Washington's relations with the respective countries.