US President Donald Trump signed an order on Thursday to implement the lower tariffs on Japanese automobile imports and other products that were announced in July.
Formalising the agreement between the US and a key Asian ally comes after months of negotiations, reduces uncertainty for the massive Japanese auto sector and confirms an agreement for $550 billion of Japanese investment in US projects.
The lower tariffs on Japanese autos are set to take effect seven days after the order is published. Some of the tariff relief is retroactive to August 7.
Trump’s order also means a reduced US tariff rate on Japanese cars, from the current 27.5% to 15%, is set to take effect by the end of this month, Reuters reported earlier, citing a Japanese government source.
Trump’s levies on global shipments have hit Japanese carmakers hard. Last month, Toyota said it expected a hit of nearly $10 billion from Trump’s tariffs on cars imported into the United States.
“Finally,” Ryosei Akazawa, Japan’s top trade negotiator, posted to X, in a nod to the months-long trade talks that had frustrated lawmakers in Tokyo. Thursday marked his 10th trip to the US for the negotiations.
Toyota praised Trump’s efforts to reach a trade deal with Japan. “While nearly 80% of the vehicles Toyota sells in the US are made in North America, this framework provides much-needed clarity,” the company said in a statement.
Trump’s order says Japan is “working toward an expedited implementation of a 75% increase of United States rice procurements… and purchases of United States agricultural goods, including corn, soybeans, fertiliser, bioethanol (including for sustainable aviation fuel)” and other US products totalling $8 billion per year.
As part of the deal, Japan will buy 100 Boeing BA.N planes and hike defence spending with US firms to $17 billion annually, from $14 billion, the White House said in July.
Japan said in July that the share of US rice imports may increase under its existing framework, but that the agreement did “not sacrifice” Japanese agriculture.
Trump’s order on Thursday also reiterates that the Japanese government has agreed to invest $550 billion in the United States in projects that will be selected by the US government.
Two-way trade between the two countries reached nearly $230 billion in 2024, with Japan running a trade surplus of nearly $70 billion.
The United States, in July, agreed to lower tariffs on imports of Japanese automobiles, but the timing remains unclear as Trump had yet to sign an executive order.
Japan has said the trade deal ensures the US’s fifth-largest trading partner will always receive the lowest tariff rate on chips and pharmaceuticals of all the pacts negotiated by Washington. It also includes no tariffs on commercial aeroplanes and parts.
The executive order is also expected to include provisions that the 15% levy agreed in July would not be stacked on Japanese imports that are subject to higher tariffs, while items previously subject to less than 15% tariffs would be adjusted to 15%, the source said.
The investment package, which will come in the form of equity, loans and guarantees from Japan’s government-owned banks, was agreed as part of the July trade deal.
The European Union secured a 15% baseline tariff as part of a framework trade deal with the US in July, averting looming new tariffs on chips and pharmaceuticals.
Last week, the European Commission proposed removing duties on imported US industrial goods in return for reduced US tariffs on European cars, a key part of the trade agreement between the EU and the United States. One automaker official told Reuters that as of Thursday, European car imports to the United States are still facing 27.5% tariffs.
