Trump signs executive order on U.S.-Japan trade deal

September 05, 2025 (MLN): U.S. President Donald Trump on Thursday signed an executive order to implement a trade deal with Japan, introducing a baseline 15% tariff on most Japanese goods, including automobiles.

The deal, finalized in July after months of negotiations and weeks of further haggling, commits Tokyo to invest $550 billion in projects selected by the U.S. government and ramp up purchases of American agricultural products such as corn, soybeans, U.S.-made commercial aircraft, and defense equipment.

Japan will also provide “breakthrough openings in market access” in manufacturing, aerospace, agriculture, and automobile sectors, as CNBC reported.

The July agreement included Japan’s purchase of 100 Boeing planes, a 75% increase in imports of U.S. rice, and $8bn worth of agricultural and crop products.

According to the order, Washington will apply a 15% tariff on nearly all Japanese imports, with sector-specific levies on automobiles and parts (15%), aerospace products, generic pharmaceutical goods, and natural resources.

The order prevents Trump’s country-specific tariffs from being applied on top of existing levies.

The reduced tariffs will apply retroactively to Japanese goods entered for consumption on or after August 7, 2025, while tariff relief on automobiles will take effect seven days after the signing.

Trump’s global tariff campaign has unsettled supply chains, hitting Japan’s auto sector in particular.

Toyota recently warned it expected nearly $10bn in losses as U.S. tariffs cut into sales, forcing a 16% downgrade in its full-year operating profit forecast.

Rivals are also bracing for losses, with Ford projecting a $3bn decline in pre-tax adjusted profit and GM expecting a $4–5bn hit this year.

Meanwhile, Japan’s top trade negotiator, Ryosei Akazawa, delivered a letter from Prime Minister Shigeru Ishiba inviting Trump to visit Japan, Kyoto News reported.

Akazawa had earlier canceled a planned trip to Washington due to pending technical discussions.

The deal’s finalization comes as Ishiba faces growing political pressure at home.

The ruling Liberal Democratic Party (LDP) this week released a report attributing its July upper house election losses to weak inflation measures, past scandals, and poor mobilization of young voters.

Local media reported that several key LDP members have offered to resign, though Ishiba has vowed to remain in office despite calls for a new leader.

Analysts note rising discontent within the party. James Brady of consultancy Teneo said the reports signal an “implicit indictment of Ishiba’s leadership.”

Eurasia Group analysts suggested Ishiba is unlikely to survive a leadership challenge expected Monday, projecting a 60% chance of his defeat and the possibility of resignation beforehand as internal opposition grows.

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