Japan-US Auto Trade Deal Eases Tariffs

U.S. President Donald Trump announced a trade agreement with Japan that imposes a 15% tariff specifically on Japanese auto exports to the U.S., down from a previously threatened 25%, providing relief to Japan's car industry and boosting shares of automakers like Toyota and Honda. The deal, which excludes foreign exchange provisions, also includes $550 billion in Japanese investments in the United States. The Nikkei 225 surged nearly 2% in response, and the agreement has raised hopes for similar compromises with the European Union, as the U.S. faces an Aug. 1 deadline for possible 30% tariffs on EU imports. Analysts suggest this reduction in tariffs without export caps for Japan may shape U.S. negotiations with both the EU and South Korea, which is preparing for its own trade talks. The Japanese government clarified that foreign exchange issues were negotiated separately amid prior U.S. pressure on the yen. The deal also signals to other U.S. allies, such as Australia, that favorable trade outcomes are not guaranteed.