Listen to the article
3 min
This audio is auto-generated. Please let us know if you have feedback.
President Donald Trump on Sept. 4 formalized an agreement with Japan that clarified how its 15% tariff would be enacted, in line with a previously announced framework deal.
In the executive order formalizing the deal, Trump said “nearly all” imports from the country would be charged a 15% tariff. Goods typically charged lower than 15% would see an ad valorem duty added to reach the new rate, while goods already paying more than 15% would not see a new duty added, bringing the tariff structure in line with the European Union’s. The duty structure is retroactively effective Aug. 7, and shippers can request customs refunds using standard procedures.
In addition, the administration formalized a wide array of previously announced investments and sector-specific tariff treatment relevant to the automotive, aerospace and agriculture industries. It also opened the door for further exceptions for civil aircraft and for scarcely available products.
Products of Japan considered natural resources unavailable in the U.S. — or cannot be scaled to meet domestic demand — could face a 0% reciprocal tariff rate, per the order. Generic pharmaceuticals, pharmaceutical ingredients and pharmaceutical chemical precursors could also be exempt from a reciprocal tariff rate.
The tariff deal also included two key clauses for the automotive industry:
Automakers will also pay just a 15% tariff — instead of the 25% section 232 tariff — for automobiles and automobile parts deemed “products of Japan,” per the order. Further rules may be issued around determining whether automobiles or automobile parts are “products of Japan.”
U.S.-manufactured and safety-certified vehicles will be allowed to be sold in Japan without additional testing, according to the executive order.
Furthermore, as outlined in July, Japan would up U.S. rice imports by 75%, and purchase $8 billion worth of agricultural goods, such as soybeans and fertilizers per year.
The deal also outlines provisions for aerospace producers, with Japan expected to purchase U.S.-made commercial aircraft alongside U.S. defense equipment. Per a July 23 White House Fact sheet, Japan had agreed to buy 100 Boeing aircraft, although the recent executive order did not provide further details.
Japan also plans to make $550 billion worth of U.S. investments, which will be selected by the U.S. government, per the order. The funding aims to expand domestic manufacturing and generate hundreds of thousands of U.S. jobs.
The now-enacted trade deal aims to lessen the U.S. trade deficit with Japan, which stood at $68 billion in 2024, according to U.S. International Trade Commission data. As of last year, imports from Japan accounted for 4.3% of all U.S. trade.
Trump initially announced in July that Japan would face a 25% tariff rate, effective Aug. 1. The tariff deal announced later that month lowered the rate to 15%.
AloJapan.com