- President Donald Trump reached a trade deal with Japan that will impose 15% tariffs on imports including automobiles from Japan.
- The deal includes a $550 billion fund to make investments in the US, with Japan agreeing to provide the funds to invest in projects in America.
- Japan will also buy 100 Boeing Co. aircraft, boost rice purchases, and buy $8 billion in agricultural and other products, while hiking defense spending with American firms.
President Donald Trump reached a trade deal with Japan that will impose 15% tariffs on imports including automobiles from the key American ally, while creating a $550 billion fund to make investments in the US. The agreement, touted by Trump after he secured breakthroughs in a final 75-minute Oval Office meeting Tuesday with Japanese negotiators, spares the nation from a threatened 25% tariff that was set to take effect next week. “They had their top people here and we worked on it long and hard, and it’s a great deal for everybody,” Trump said at a White House event Tuesday evening. Under the deal, automobiles and parts would be subjected to the same 15% rate as Japan’s other exports, Prime Minister Shigeru Ishiba said in Tokyo, amid local media reports that he’s planning to step down in the wake of the agreement following a poor showing for his party in an election on Sunday. In return, Japan will accept cars and trucks built to US motor vehicle safety standards, without subjecting them to additional requirements — a potentially major step to selling more American-built vehicles in the country. The auto sector tariff had been one of the main sticking points in the negotiations.
Shares in Japanese carmakers jumped in Tokyo on reports the auto sector rate would be lowered to 15% from 25% for Japan. Toyota Motor Corp. rose as much as 16%, compared with gains of around 3% in the Topix benchmark index in the early afternoon. The yen strengthened against the dollar at first, before weakening after the reports of Ishiba’s intention to resign.
A centerpiece of the pact with Japan is the $550 billion investment pledge. A senior US administration official, speaking on condition of anonymity to outline the agreement, said the pledge was akin to a sovereign wealth fund under which Trump himself could steer investments inside the US. Final terms of the agreement still need to be enshrined in a formal proclamation. Legal particulars and other details surrounding the pledge are still being hammered out, according to the official. The investment timeline is not certain, and it’s not clear whether Trump would be able to allocate the full sum during his term.
NN: The oil market has been range bond for weeks. Trading within a $2.00 range. Fearing that tariff wars would slow oil demand. Trump is NOT going to kill global trade. Proof he just did a deal with one of Americas biggest trading partners Japan.