Trump signs an executive order enforcing Japan trade agreement

U.S. President Donald Trump has formally approved the U.S.-Japan trade deal, calling it a “landmark step” in reshaping economic ties. The order cements commitments made during Trump’s July summit with Prime Minister Fumio Kishida after months of negotiations.

Under the order, a 15% initial tariff will be imposed on all Japanese goods entering the United States. Japanese vehicles currently would have been hit with duties as high as 27.5%. Under the new rules, that percentage falls to 15%, a win for the auto industry.

Suspended industry categories that will not be subject to the blanket tariff rule. Cars, aerospace, generic medicines, and natural resources — all will have sector-specific treatment. The White House said this “safeguarded U.S. industries” and workers, providing a fairer trade landscape.

Other American officials said the deal was expected to reinforce supply chains and provide more predictability for governments and businesses.

Japan to invest record amount in U.S.

Under the deal, Japan will invest an estimated $550 billion in United States businesses in the years ahead. It is the biggest investment pledge by a foreign country in the U.S. economy.

The money will be spent in major sectors including energy, semiconductors, defense, clean technologies, and transportation. White House officials said the deal would generate “hundreds of thousands” of American jobs and help to decrease reliance on competitors like China.

Japan has also promised to increase its purchases of U.S. farm products. These include up to 75% of rice imports and other imports, including corn, soybeans, fertilizer, and bioethanol, which total approximately $8 billion a year.

Japan has already accepted U.S. safety standards for cars, allowing American-made cars to enter the Japanese market without additional testing. This is expected to help U.S. automakers cut costs and accelerate exports. Tokyo will also increase aerospace and defense equipment purchases from the United States, like commercial airplanes. This will “unlock billions in new sales” for American manufacturers, the White House said.

American farmers and manufacturers have lobbied for years to gain easier entry to the Japanese market. Several trade groups have cheered the agreement as a break from the past that would even the playing field.

U.S. promises to fix the tariff issue

While welcomed by U.S. farmers and manufacturers as long overdue, the deal faces concerns in Japan over possible tariff “stacking” that could push duties above 15%.

Japan has described this as a “regrettable inconsistency,” and said that Washington has promised to correct the issue. The USA will also ban discrimination based on bulk capacity and reimburse any overcharging.

These rules are being closely watched by industry groups on both sides. Toyota, which expressed support for the deal, said it appreciates the clarity it affords and “helps Toyota meet the needs of our customers for decades to come.

The executive order is the next step in enacting that deal. U.S. agencies will implement the new tariff structure, while Japanese officials will be responsible for their end of the investment oaths.

Trade experts say additional discussions are expected to take place to resolve technical issues. This includes tracking investments, handling returns, and providing clear time-tables for purchases of agricultural products.

Markets and businesses are also waiting to see how the changes will translate into prices. Analysts say American farmers could benefit in the short term, while automakers might see a shift in competitive dynamics in the long term.

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