Trump says US has struck trade deal with Japan

President Donald Trump has announced that the United States has reached a major trade agreement with Japan, one of its largest trading partners. According to Trump, Japan has agreed to invest 550 billion dollars in the US, and Japanese goods sold in America will now face a 15 percent tariff, which is lower than the 25 percent tariff Trump had previously threatened. Trump shared on social media that Japan will open its markets to more US goods, including cars, trucks, rice, and certain agricultural products. Japan's Prime Minister Shigeru Ishiba welcomed the news, saying it was the lowest tariff rate so far among countries that have a trade surplus with the US.

At a White House event, Trump called the agreement the largest trade deal in history, saying that both countries worked hard to reach a deal that benefits everyone. Ishiba explained that the new agreement will reduce US tariffs on Japanese vehicles and parts from 25 percent to 15 percent. However, this is still higher than the 10 percent tariff that was in place earlier this year when Trump temporarily suspended higher tariffs. Japan's automotive sector is a key part of its economy, making up almost 3 percent of the country's total output. In 2019, Japan exported 410 billion dollars worth of cars and auto parts to the US. Ishiba pointed out that Japan is the first country to get lower tariffs on cars and parts without any limits on the number of vehicles they can send. In comparison, UK cars sent to the US are taxed at a lower 10 percent rate, but only up to a quota of 100,000 vehicles. Ishiba also made it clear that the agreement does not include any reduction of tariffs on the Japanese side for US goods.

Not everyone is pleased with the deal. US car manufacturers are unhappy because the agreement lowers tariffs on Japanese imports, but keeps the 25 percent tax on cars and parts from Canada and Mexico. Matt Blunt, president of the American Automotive Policy Council, which represents Ford, General Motors, and Stellantis, called the deal with Japan a bad one. The BBC has reached out to the White House and Japan's embassy in Washington for more details. In addition to the deal with Japan, the US also announced a trade agreement with the Philippines, where imports will be taxed at 19 percent. Shigeto Nagai, an expert from Oxford Economics, said that Japan's 15 percent tariff is the best compromise they could make at this time. He also noted that Japan's planned investment in the US will help boost American manufacturing and create more jobs, which fits with Trump's goal of reviving US industry.

Earlier this month, Trump sent a letter to Japan threatening a 25 percent tariff on Japanese exports if a new trade deal was not reached by August 1. The US had announced higher tariffs on many trading partners in April, but paused them for 90 days to allow for negotiations. Japan is the world's fourth largest economy, behind the US, China, and Germany. After the announcement of the deal, Japan's main stock market index, the Nikkei 225, rose by 3. 5 percent, with car companies like Toyota, Nissan, and Honda seeing strong gains. The deal comes at a time when Japan's ruling party has lost some power in recent elections.

This trade agreement is significant for both countries. For the US, it means more investment and possibly more jobs, while for Japan, it secures better access to the American market for its important car industry. However, the deal has also caused some controversy, especially among US car makers who feel it does not treat all trading partners equally. The agreement highlights the challenges and negotiations involved in international trade, as countries try to protect their own interests while working together. The long-term effects of the deal will be watched closely by businesses and governments on both sides.