Trump Formalises Japan Trade Deal with 15% Tariff

Highlights:

• Trade Agreement: US President Donald Trump signed an executive order capping tariffs on most Japanese products at 15%, including automobiles and parts.
• Tariff Relief: The deal applies retroactively from August 7 and includes relief for aerospace, auto imports, and pharmaceuticals.
• Japan’s Gain: Tokyo secured partial relief as tariffs dropped from 27.5% to 15%, offering support to its crucial auto industry.

Executive Order Signed

US President Donald Trump has signed an executive order implementing a trade agreement with Japan that sets a maximum 15% tariff on most Japanese exports, including automobiles and parts. The directive, signed on Thursday (Friday AEST), officially formalises a deal that had been reached in July but delayed due to ongoing negotiations between Washington and Tokyo.

Tariff Details

Under the order, the new tariffs will be applied retroactively to goods shipped from August 7, the same date that broader US tariffs on multiple trading partners came into force. Importantly, the measure ensures that these new country-specific duties will not stack on top of existing levies, preventing an even higher tariff burden on Japanese exporters. The executive order also stipulates that relief for aerospace and automobile imports will take effect within seven days of the signing. This move is aimed at providing breathing room for Japan’s auto industry, which remains central to its economy.

Japan’s Push for Relief

Japan had been pressing the US to lower auto tariffs, previously set as high as 27.5%. The reduction to a 15% cap is seen as a partial win for Tokyo, though industry leaders continue to call for further tariff easing. The agreement also includes provisions to remove certain tariffs on aircraft, aircraft parts, pharmaceuticals, and precursor chemicals, signaling a broader attempt to ease friction in key sectors.

Market and Trade Implications

At the time of writing, global markets were closely watching the development, with analysts noting that the deal may help stabilize US-Japan trade relations while easing concerns in the automotive and aerospace sectors. However, questions remain over whether this agreement will set a precedent for future trade negotiations under the current administration.

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