US President Donald Trump on Thursday signed an executive order implementing tariff cuts under an agreement with Japan announced in July, lowering duties on Japanese automobile imports and formalising a $550 billion investment pledge.According to news agency Reuters, the order reduces the tariff on Japanese autos from 27.5% to 15%, with the change taking effect within seven days of its publication in the Federal Register.
The modifications will also apply retroactively to goods shipped from August 7, the date higher duties on dozens of economies took effect, as per news agency AFP. Other imports from Japan that previously faced tariffs above 15% will not be subject to an additional levy, while goods below that rate will be adjusted to 15%.Japan’s top negotiator Ryosei Akazawa welcomed the move, telling reporters in Washington that the step was a “steady implementation of the agreement reached on July 22.” Akazawa’s trip marked his 10th round of talks with US officials. “Finally,” he posted on X, signalling relief after months of negotiations.But he also cautioned that the 15% tariff would “still cause damage to our nation’s industries,” adding that Tokyo would take “swift and necessary measures, like financing assistance” to support affected sectors, as per AFP.According to Japan Today, the order also granted Japan “reciprocal” treatment on duties, correcting an earlier omission when similar provisions were extended to the EU. A memorandum of understanding was signed between Akazawa and US commerce secretary Howard Lutnick, covering Japan’s planned “strategic investments” in the United States. “This is historic,” Lutnick said at the signing.The deal commits Japan to invest $550 billion in US projects through equity, loans, and guarantees from state-backed banks, with Washington retaining authority to select projects. Trump has said the United States will keep 90 percent of the profits from these investments, which Japan clarified will largely consist of loans and loan guarantees.Investments will target critical sectors such as minerals, semiconductors, and pharmaceuticals. Trump said the inflows would “generate hundreds of thousands of US jobs, expand domestic manufacturing, and secure American prosperity for generations.”As part of the arrangement, Japan has agreed to increase its annual purchases of US agricultural goods, including corn, soybeans, and fertiliser, to $8 billion, along with a 75% rise in rice imports. The agreement also includes Japan buying 100 Boeing planes and lifting defence spending with US firms to $17 billion annually, up from $14 billion, Reuters noted.Toyota, which last month estimated a $10 billion hit from earlier US tariffs, praised the order for providing “much needed clarity.”While shares of Japanese automakers rose slightly on Friday, South Korean carmakers remained under pressure as Seoul awaits a similar executive order from Washington.The deal comes at a sensitive moment for Japanese Prime Minister Shigeru Ishiba, whose leadership faces a test with his ruling party set to vote on a possible extraordinary election. Analysts cited by Reuters said that while finalising the trade pact could strengthen Ishiba’s position, he still faces internal backlash over rising living costs and weak economic growth.
