Trump seals trade deal with Japan, comes with economically bizarre conditions

Donald Trump announced on Tuesday that the United States and Japan had finalized what he described as the “largest Deal ever,” a sweeping trade agreement that includes new 15% reciprocal tariffs on all Japanese exports to the U.S.

The news, of course shared by Trump on Truth Social, followed a weeks-long tariff threat campaign and came with a long list of unusual financial promises. According to Trump, Japan will inject $550 billion into the U.S. economy under this new agreement. He also claimed the U.S. would “receive 90% of the Profits.”

The announcement, made from Washington, comes just days after Trump sent a formal tariff notice to Japan, warning that starting August 1, exports to the U.S. would be hit with a 25% tariff if no agreement was reached.

That letter followed an earlier move on April 2, when Trump first revealed a 24% rate during what he called “Liberation Day” tariffs. The goal was clear: pressure Japan into offering more trade concessions or face even higher penalties. Trump’s statement on Tuesday confirmed that those tariffs would now instead be set at 15%, as part of a “reciprocal” deal.

Markets respond, tech earnings and housing data next

Trump also said Japan had agreed to open up its markets “to Trade including Cars and Trucks, Rice and certain other Agricultural Products, and other things.” He added that the deal would lead to the creation of “Hundreds of Thousands of Jobs.”

But no timeline or breakdown was provided for either the investment or the projected jobs. The White House has not released any official documentation detailing how the $550 billion investment will be managed or how the profit-sharing model will work.

The auto sector is one of Japan’s key export engines. In 2024, Japanese car shipments made up 28.3% of the country’s total exports. Under current rules, Japanese automobiles shipped into the U.S. already face a 25% tariff, the same applied to all other countries. Trump’s new deal doesn’t remove that number but repackages it under a broader reciprocal framework.

Market reaction was immediate. Futures for the Nikkei 225 in Chicago jumped to 40,185, compared to the index’s last close at 39,774.92. In Australia, the S&P/ASX 200 futures climbed to 8,681, slightly above the previous close of 8,677.20. Hong Kong’s Hang Seng futures also edged up to 25,321, improving from 25,130.03.

In the U.S., S&P 500 futures moved up 0.2% by Tuesday evening after the news broke. Dow Jones futures rose 99 points, or 0.2%, while Nasdaq 100 futures hovered near the flatline. The broader investor reaction reflected interest, not celebration. That’s because everyone’s eyes are on the earnings calendar.

Alphabet and Tesla are expected to report on Wednesday after the market closes. These will be the first major updates from megacap tech companies this earnings season. Traders are watching closely, since tech has led the rally for years.

Ahead of that, Hasbro is expected to report before the bell, followed later by Chipotle Mexican Grill and Mattel. The earnings flow is heavy this week, and so far, about 17% of S&P 500 firms have reported—with 85% beating expectations.

Beyond corporate earnings, economic data is also on the docket. Traders are looking ahead to existing home sales data due Wednesday morning, which could offer a clearer view of the housing market’s direction, which is now more unaffordable than ever, as Cryptopolitan reported.

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