Trump secures historic trade deal with Japan, slashes auto tariffs

U.S. President Donald Trump announced a deal with Japan that lowers tariffs on Japanese auto imports and avoids the imposition of new punitive levies on other Japanese goods.

The agreement includes a substantial $550 billion investment and loan package aimed at strengthening U.S.-bound supply chains in critical sectors such as pharmaceuticals and semiconductors, Caliber.Az reports via foreign media.

Under the deal, tariffs on Japan's key automotive sector—responsible for over a quarter of its exports to the U.S.—will be reduced from 25% to 15%. Similarly, duties scheduled to be imposed on other Japanese products starting August 1 will be cut by the same amount, signalling a significant easing of trade tensions between the two nations.

The announcement triggered a surge in Japan’s financial markets. The Nikkei stock index climbed more than 3% to its highest level in a year, buoyed by sharp gains in automaker shares, with Toyota rising over 14% and Honda nearly 12%.

President Trump hailed the deal on his Truth Social platform, calling it "the largest TRADE DEAL in history with Japan" and emphasising the strong ongoing relationship between the two countries.

Japanese politician Shigeru Ishiba, who is reportedly stepping down after a recent electoral defeat, described the deal as "the lowest figure among countries that have a trade surplus with the U.S." He also highlighted that Japan will boost imports of U.S. agricultural products like rice, although he assured that the agreement "did not sacrifice" Japanese agriculture.

The optimism generated by the Japan deal extended to South Korean markets, with South Korean carmakers’ shares rising on hopes of a similar agreement. The Japanese yen strengthened modestly against the dollar, while futures for European and U.S. equity indexes advanced.

However, the deal drew criticism from U.S. automakers. The American Automotive Policy Council, representing industry giants General Motors, Ford, and Stellantis, expressed concern that the tariff reductions favour Japanese imports over vehicles produced in North America, despite those vehicles containing higher U.S. content. Matt Blunt, the council's head, called the deal "a bad deal for U.S. industry and U.S. auto workers."

By Vugar Khalilov