Donald Trump Signs Historic Trade Agreement with Japan Aimed at Lowering Tariffs and Boosting Investment Initiatives
The President of the United States, Donald Trump, officially signed a decree affirming a new chapter in the trade relations between the US and Japan.
The agreement establishes a framework for reducing tariffs on a wide range of goods, including automobiles and spare parts, to no more than 15 percent.
While negotiations reached this understanding back in July, the formalization process had been delayed due to prolonged discussions and negotiations over specific conditions.
Japanese trade official Ryozei Akazawa, who was in Washington this week and met with Trump on September 4, disclosed that the deal involves establishing a US-Japan investment fund worth 550 billion dollars.
Additionally, the directive from Trump aims to prevent the imposition of tariffs on certain countries beyond existing tariffs, providing a safeguard for specific sectors.
Under the agreement, most goods shipped from August 7, the date when increased US tariffs took effect, will be subject to retroactive customs duties of 15%.
Furthermore, within the next seven days, exemptions will be enacted for imports of aerospace, automotive, and pharmaceutical products.
Japan had insisted that the US adhere to previously agreed-upon reductions in automobile tariffs from 27.5%, which is crucial for supporting its significant economic sector.
Stock prices of Japanese automakers surged following the signing: Mazda and Nissan, which generate over half their revenue in North America, increased by more than 5%, while Toyota gained 3.5%.
The agreement also includes the abolition of certain tariffs on aircraft and aircraft parts, as well as on generic medicines, their ingredients, and precursor chemicals.
Both the US and Japan, along with India and Australia, plan to collaborate on reducing dependence on China for the supply of critical minerals.
US Trade Secretary Howard Lutnick and Akazawa signed memoranda of understanding on Thursday evening to formalize the deal.
However, Japanese officials have been eager to conclude the trade agreement within weeks.
The $550 billion investment fund remains one of the key unresolved elements, as precise details on its funding mechanisms have yet to be disclosed.
Lutnick emphasized that “this is a historic moment, as Japan has committed to allocating this sum to invest in infrastructure that enhances the national security and economic interests of the US.
Our close cooperation is opening new avenues for American companies and expanding access to Japanese markets,” he said during the signing ceremony.
Prime Minister Shinzo Abe previously highlighted that Tokyo intends to offer a combination of investments, loans, and guarantees to support Japanese projects in the US, further stimulating economic growth on both sides.