Trump announces biggest trade deal” with Japan: what’s behind it?

Trump announces biggest trade deal” with Japan: what’s behind it?

US President Donald Trump has announced a new trade deal with Japan that he describes as “the greatest ever.” In a statement on Truth Social, Trump said a "huge deal" had been reached with Japan that included a "reciprocal" 15% tariff on Japanese exports to the US. This agreement is intended to encourage Japan to invest $550 billion in the United States, although the exact details of the investments and distribution of profits are still unclear. Trump claims that the US will receive “90% of the profits” from this agreement.

Trump also said the deal would "create hundreds of thousands of jobs" and open Japan to U.S. goods, including cars, trucks, rice and agricultural products. Japanese Prime Minister Shigeru Ishiba confirmed that negotiations had taken place, but expressed reluctance and said he would carefully consider the details. Ishiba signals his willingness for further discussions, whether by telephone or in person.

Additional context and trade tensions

This deal is not the first trade deal Trump announced that day. It is the third trade announcement following similar agreements with the Philippines and Indonesia. The negotiations come against the backdrop of growing trade tensions, particularly after Trump threatened a 25% tariff on imports from Japan, which could come into effect on August 1st. Flat-rate tariffs of 10% on imports from Japan have been in effect since April.

The main points of contention between the USA and Japan are US rice exports and the access of US cars to the Japanese market. In 2024, Japan imported $298 million worth of rice from the US, but access is hampered by a "highly regulated and opaque import and distribution system." Additionally, only about 16,700 U.S. vehicles were sold in Japan last year, which represents a small market share.

Trade relations and economic impacts

Japan is the United States' fifth-largest trading partner, with exports worth $148 billion in 2024. Major exports from Japan include cars, machinery and vehicle parts, while imports from the United States include oil, pharmaceuticals and aerospace technology worth $80 billion. Japan is also the United States' largest foreign creditor, with $1.1 trillion worth of U.S. government bonds.

Although the agreement may be domestically advantageous for Trump, numerous questions remain unanswered. Japan has a strong interest in avoiding higher tariffs while maintaining a balance between the US and China. Experts note that the deal may offer benefits for Japanese consumers but offers little opportunity for U.S. automakers.

For more information, see the reports on The review and Mirror.