A newly manufactured car awaits exports at a port in Yokohama, south of Tokyo on March 27, 2025.
Ichishima Kato | Reuters
US President Donald Trump signed the state’s order on Thursday, enacting a trade agreement with Japan, and leviing a baseline fee of 15% on most Japanese goods, including cars.
The deal reached July after months of negotiations, with Washington and Tokyo continuing to mess with details for weeks after signing.
As part of the deal, Tokyo has agreed to invest $550 billion in projects selected by the US government and increase the purchase of American agricultural products, such as corn and soybeans.
The US allies in Asia will also offer a “groundbreaking opening of market access” for the manufacturing, aerospace, agriculture and automotive sectors, the order said Thursday. The contracts reached in July included Japan buying 100 Boeing aircraft, 75% of US American imports and $8 billion worth of agricultural and crop products.
Washington will apply a baseline 15% tariff on almost all Japanese imports, with cars and parts (separate sector-specific taxes for aerospace products, general medicines and natural resources), according to the executive order.
Thursday’s order will prevent Trump’s country-specific tariffs, in addition to existing taxes. Lower tariffs apply retrospectively to Japanese goods entered for consumption or withdrawn from warehouse for consumption after 12am or 12am, Eastern Nikko time on August 7, 2025. Automobile tariff relief is set to take effect in 7 days.
Trump’s global tariff campaign has thrown the global supply chain upset, particularly the large automotive sector in Japan. last month, Toyota He warned that Trump’s tariffs on Autos have put pressure on sales to the US, which is expected to hit nearly $10 billion and forced a 16% reduction in full-year operating profit forecasts.
Tariffs are also expected to hit rivals, with Ford’s pre-tax adjusted profits reportedly falling by $3 billion, with GM projecting hits of $4 billion to $5 billion a year.
Ryosei, Japan’s top trade negotiator in Washington, has delivered a letter from the Japanese prime minister inviting the Japanese prime minister to visit his country, Kyoto News reported. Japanese officials reportedly cancelled their trip to the US last month.
Political tide
The final decision on the contract came as political pressure for Japanese leaders to appear at home. Earlier this week, the ruling Liberal Democrats released their long-awaited report on why they lost their seats in the July Senate elections.
The report defeated the lack of appeal for party measures aimed at keeping inflation, previous political scandals and weak mobilization of young voters in mind.
Local media reports suggested that many key members of the LDP have shown intentions to resign as prime minister, but Isba said he intends to stay on calls within his party to choose another leader.
The report avoided naming individuals, but shows “an implicit accusations against the leader of Isba’s party.”
Analysts at the Eurasian Group proposed in a report on Friday that Isba is unlikely to survive the challenge from within the party next Monday.
Analysts predicted that “deteriorating performance as party leader in House elections and events, including former Prime Minister Sanomura, who announced his support for the special election,” and that analysts could potentially resign before the vote, predicting a strange 60% defeat in the election.
