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The US and Japan work things out

Japanese automakers popped on the deal's announcement, while US automakers cried foul.

The Japanese flag flying over the Bank of Japan building

Richard A. Brooks/Getty Images

less than 3 min read

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Just like when you turned in your fourth-grade science fair project, the latest trade deal came with some last-minute edits and Sharpie scribbles.

But corrections or not, the US has worked out a comprehensive deal with Japan, the world’s fourth largest economy and the US’s second largest trading partner. President Trump announced via Truth Social that his baseline reciprocal tariff rate for the nation will be set at 15%. Here's what else you should know:

  • Japan will invest $550 billion in the US, with Trump saying the US will "receive 90% of the Profits.”
  • Trump added on Truth Social that Japan will be open to trade, “including Cars and Trucks, Rice and certain other Agricultural Products, and other things.”
  • Auto tariffs on Japan, a flashpoint of the deal and a vital part of Japan’s economy, will also be lowered to 15% from their current level of 25%.

Japan’s top trade negotiator, Ryosei Akazawa, affirmed Trump’s announcement, posting #MissionAccomplished on X.

Driving gains: Japan’s auto industry was certainly psyched about the news, with Toyota jumping 13.64% today, Honda rising 13.08%, Mazda Motor gaining 17.58%, and Mitsubishi Motors climbing 13.03%. Overall, the Nikkei 225 Index surged 3.51% after the news was announced.

Meanwhile, a trade group representing GM, Ford, and Stellantis slammed the deal. They're upset that Japanese automakers can now send their cars to the US with a tariff of just 15%, while manufacturing a car in Mexico or Canada and importing it into the US will cost domestic producers a 25% levy. That said, shares of all three companies rose today on the news as well.

Who’s next?

Today’s deal offers an optimistic glimpse of how the rest of the US’s major trading partners, like Canada and the EU, could work out truces before the August 1 deadline. Deals with Indonesia and the Philippines announced Tuesday also signaled that Trump is finally actually reading The Art of the Deal and putting it to work.

“We have Europe coming in tomorrow, and the next day, we have some other ones coming in,” Trump said in a speech today announcing the Japan deal.

The race is on: Right now, the fight looks tough: The EU is planning on taxing $100 billion of US goods at a rate of 30% if the deal can’t be figured out, while Trump’s tariff on Canada stands at 35%.

Time to get some more Sharpies out.—LB

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