President Donald Trump announced Tuesday, July 22, 2025, a new trade agreement with Japan that includes a 15% tariff on Japanese imports to the United States and a $550 billion investment from Japan into the U.S. economy. Trump revealed the deal via his Truth Social platform, calling it a “massive” agreement and noting that the U.S. will receive 90% of the profits from the investment.
As part of the deal, Japan will open its markets to U.S. goods, including automobiles, trucks, rice, and other agricultural products. The 15% tariff is a step back from the 25% Trump had proposed earlier and the 24% rate floated on “Liberation Day” in April.
“This is a very exciting time for the United States of America,” Trump wrote, praising the strong bilateral relationship. He added, “They had their top people here, and we worked on it long and hard, and it’s a great deal for everybody.”
During a White House reception with GOP lawmakers, Trump emphasized the scope and significance of the agreement. Japan is currently the fifth-largest trading partner of the U.S., exporting $148.2 billion worth of goods to the country last year—$52.3 billion of which were vehicles and auto parts.
Japanese Prime Minister Shigeru Ishiba confirmed the reduction in auto tariffs to 15%, a move that boosted shares of Japanese carmakers. “We are the first country in the world to reduce tariffs on automobiles and auto parts, with no limits on volume,” he told reporters. Ishiba said the deal protects Japan’s interests while strengthening ties with the U.S.
However, Japan’s trade envoy Ryosei Akazawa clarified that 50% tariffs on steel and aluminum would remain, and increased defense spending was not included in the deal.
Trump also hinted at a separate deal involving Alaskan liquefied natural gas and revealed similar agreements with Indonesia and the Philippines, which will face 19% tariffs on exports to the U.S.
These deals come amid a broader push by Trump to secure last-minute trade agreements. He recently sent letters to over two dozen nations, warning of steep tariff hikes starting August 1 unless new deals are struck. The current average U.S. import tariff is about 2.5%, but Trump’s new baseline is 10%, with higher rates for major economies.
Commerce Secretary Howard Lutnick said on Face the Nation that the next two weeks will be “for the record books” as countries rush to finalize deals. He defended the tariffs, saying they would boost American manufacturing without significantly affecting inflation.
However, Federal Reserve Chair Jerome Powell previously expressed concern that higher tariffs could push up consumer prices. While the Fed has held interest rates steady, Powell cited Trump’s trade policy as a key inflation risk.
Still, Trump maintains that the tariffs are necessary to combat unfair trade practices, revive domestic industry, and increase federal revenue.
