WASHINGTON: US President Donald Trump on Tuesday unveiled what he called the “largest deal ever” — a sweeping trade pact with Japan that slashes auto tariffs and unlocks an eye-popping $550 billion in Japanese investment into the United States.
The agreement, finalised just days before a threatened August 1 tariff hike, cuts US auto duties on Japanese vehicles from 25 per cent to 15 per cent, averting a steep rise that had loomed over the sector.
Japan’s Prime Minister Shigeru Ishiba confirmed the breakthrough in Tokyo on Wednesday, calling it “the most significant tariff cut among countries with trade surpluses with the US.”
Toyota shares surged over 12 per cent on the news, fuelling a broader rally in Japanese auto stocks.
The country’s car exports to the US had plunged 26.7 per cent in June, raising recession fears.
Under the pact, Japan will invest $550 billion in the US — with Washington reportedly set to receive 90 per cent of the profits — a highly unorthodox arrangement that Trump claims will “create hundreds of thousands of jobs.”
Further details were not disclosed.
Also included in the deal: expanded US access to Japan’s auto, truck, agricultural, rice, and energy markets. Ishiba, whose government recently lost its upper house majority, said the agreement does not compromise Japan’s sensitive rice sector, despite Trump’s push for greater rice and LNG imports.
The US had already imposed stiff tariffs on Japanese steel, aluminum, and vehicles — key sectors that together employ nearly 8 per cent of Japan’s workforce. – AFP
