Trump announces trade deal with Japan, including 15% tariff, increased market access

WASHINGTON – US President Donald Trump on July 22 said he had struck a trade deal with Japan that includes a 15 per cent tariff on Japanese goods entering America.

In a post on Truth Social, Mr Trump said the deal would include US$550 billion (S$703 billion) of Japanese investments in the United States.

He added that Japan would increase market access to American producers of cars, trucks, rice and certain agricultural products, among other items.

Following the announcement, Tokyo’s trade envoy Ryosei Akazawa told reporters in Washington that the separate US sectoral tariffs of 50 per cent on imports of Japanese steel and aluminium are not part of the deal.

Mr Akazawa added that the US-Japan trade deal also does not cover spending on defence.

Reuters could not immediately confirm the elements of the deal announced by Mr Trump, and details were scant.

The White House did not immediately respond to a request for additional details, while the Japanese foreign ministry did not immediately respond to a request for comment on Mr Trump’s announcement.

Japanese public broadcaster NHK reported that Japan will “effectively” raise the portion of rice it imports from the US as part of the deal, but added that it will keep the overall “minimum access” framework for rice imports.

Japan, which had protected its rice industry through strict import controls, loosened restrictions in 1995 following global trade negotiations, permitting about 770,000 tonnes of rice into the country tariff-free every year.

Japanese Prime Minister Shigeru Ishiba told reporters: “We made absolutely no sacrifice in the agricultural sector.”

Another sector that has remained a sticking point between trade negotiations between Washington and Tokyo is automobiles, which account for more than a quarter of all Japan’s exports to the US.

The new deal will see US tariffs on Japanese auto and auto parts cut from 25 per cent to 15 per cent.

However, US automakers have raised concerns about the deal which cuts tariffs on Japanese cars, but leaves tariffs still at 25 per cent on auto imports from their plants and suppliers in Canada and Mexico.

“Any deal that charges a lower tariff for Japanese imports with virtually no US content than the tariff imposed on North American-built vehicles with high US content is a bad deal for American auto industry and workers,” said Mr Matt Blunt, who heads the American Automotive Policy Council, which represents General Motors, Ford, and Chrysler parent Stellantis.

As for Japan, some analysts said while the lower tariffs is good news for the country’s economy, it alone will not prompt

its central bank to raise interest rates.

The Bank of Japan had been hiking the cost of borrowing to tame inflation but hit pause temporarily, citing uncertainty around US trade policy.

Sumitomo Mitsui Banking Corporation chief of currency strategy Hirofumi Suzuki said: “If anything, political instability is having more of an impact on the market, and the pressure for yen depreciation is likely to continue.”

The US President’s announcement follows a meeting with Mr Akazawa at the White House on July 22, according to the Asahi newspaper. REUTERS, AFP