Trump announces Japan trade deal amid speculation over future of PM Ishiba

Donald Trump has revealed a trade agreement with Japan, possibly ending weeks of tense discussions between the two allies that created economic unease in Tokyo and increasing speculation about prime minister Shigeru Ishiba’s future.

“We just completed a massive Deal with Japan” the US president announced in a post online, adding “Japan will invest, at my direction, $550 Billion Dollars into the United States.”

Ishiba said his country’s tariff negotiator had received the details of the deal and he would examine them before responding. “Our overarching concern is the interests of the nation,” he said.

In the Tuesday evening post, Trump stated that Japanese imports would incur a 15% tariff, which is better than the 25% he warned could be implemented starting on 1 August earlier this month. The tariff rate applied to US imports into Japan was uncertain.

He additionally asserted that Japan would allow US products such as cars, trucks, rice, and specific agricultural items into its market – several of which had been contentious issues in discussions.

Ishiba is encountering increasing resistance from his party after he promised to remain as leader following his coalition’s loss of upper house majority in elections last weekend, along with their lower house majority lost in October of the previous year. His stance is largely seen as unsustainable due to the two successive electoral losses.

Following the announcement of the deal by Trump, Japan’s Mainichi newspaper stated that Ishiba would declare his resignation as prime minister by the close of next month. Japan’s chief tariff negotiator, Ryosei Akazawa, stated that the 50% US tariffs on Japanese steel and aluminium imports are excluded from the agreement, and there is no mention of defense expenditure.

Japan’s automotive sector – responsible for 8% of employment in the nation – was struggling due to a 25% tariff on imports to the US. The announcement on Tuesday did not reference reducing tariffs on cars – which make up over a quarter of Japan’s total exports to the US – but Ishiba later verified that the rate would be decreased to 15%.

Stocks in Japanese auto manufacturers skyrocketed following the announcement, with Japan’s Nikkei 225 index of stocks increasing by over one percent. Earlier this month, Trump lamented the disinterest of Japanese consumers in American cars and rice – describing Japan as “very spoiled.” He proposed that an agreement with Japan could be unlikely.

Akazawa has been in the United States this week for his eighth round of discussions. The Asahi newspaper of Japan stated that he met Trump at the White House on Tuesday. The agreement with Japan comes after deals made in recent weeks with the Philippines, Indonesia, the UK, and Vietnam, coinciding with Trump facing pressure to finalize trade agreements after pledging numerous deals before his tariff deadline of 1 August.

On Tuesday, Trump proclaimed a new 19% tariff for imports from the Philippines following a meeting with Philippine president Ferdinand Marcos Jr. He stated that there would be no tariffs imposed by the Philippines on US products.

Subsequently, the White House affirmed the identical 19% tariff rate for Indonesia, reduced from an original 32%, while unveiling the conditions of an agreement made the previous week that requires Indonesia to remove tariff and non-tariff barriers on the majority of US products.