Japan will invest $500 billion dollars into the United States. President Donald Trump announced the much-awaited trade agreement with the country on Tuesday.
“We just completed a massive Deal with Japan, perhaps the largest Deal ever made,” Trump said on a Truth Social.
US importers will be required to pay 15 percent “reciprocal” tariffs on Japanese goods that are shipped to the US as part of the agreement. According to Trump, Japan would also invest $550 billion in the US.
The US “will receive 90% of the profits,” Trump added. He made no mention of how those investments would pan out or how earnings would be determined. There isn’t an official term sheet yet.
“This Deal will create Hundreds of Thousands of Jobs — There has never been anything like it. Perhaps most importantly, Japan will open their Country to Trade including Cars and Trucks, Rice and certain other Agricultural Products, and other things. Japan will pay Reciprocal Tariffs to the United States of 15%,” Trump continued.
In response to Trump’s announcement, Japanese Prime Minister Shigeru Ishiba stated that the government will “carefully” review the terms of the agreement and will speak with the US president over the phone or have an in-person meeting if needed. Like Trump, though, he provided little specifics.
Trump marked the trade deal with Japan shortly after posting, kicking off his remarks in the East Room Tuesday night.
During a reception with Republican members of Congress, the president said, “I just signed the largest trade deal in history; I think maybe the largest deal in history with Japan.”
Trump made three trade-related announcements on Tuesday, including the Japan deal. As his newest deadline for increased tariffs, Aug 1, approaches, months of negotiations with important trading partners, including the European Union, South Korea, India, and dozens more, have come to a stop.
Trump drew attention to rice sales as a source of disagreement between the two countries late last month. In a Truth Social post, he claimed that though Japan has ‘severe rice shortage, but they won’t take our RICE’.
According to trade data from the US Census Bureau, the nation purchased rice from the US worth $298 million last year. This year, Japan bought rice worth $114 million between January and April.
“Japan’s highly regulated and nontransparent system of importation and distribution for rice limits the ability of US exporters to have meaningful access to Japan’s consumers,” according to a 2021 report published by the Office of the United States Trade Representative under former President Joe Biden.
A key component of the Japanese economy–cars have also come up during the trade del negotiations as a flash point. According to Trump, Japan doesn’t import American automobiles. Earlier this month, he claimed, “We haven’t given them a car in ten years.”
The Japan Automobile Importers Association reports that 16,707 American cars were imported into Japan last year.
In an indication of a possible lull in recent tensions, US Treasury Secretary Scott Bessent met with Ishiba in Tokyo last week and was hopeful about reaching an agreement.
The deal between the US and Japan comes after the two nations struck an extended trade agreement in 2019 that allowed for the duty-free shipment of more goods the following year.
As the largest foreign creditor of the US, Japan had some negotiating power over the former in their trade agreement. The US’ enormous and growing debt is financed by $1.1 trillion in US Treasuries held by Japan.
Japan is a major trading partner of the US, in contrast to some of the recent agreements Trump has signed, such as those with Indonesia and the Philippines. Japan is the fifth-largest import source for the US.