Policy · Trade policy
U.S. and Japan strike trade deal: 15% tariffs and a $550 billion Japanese investment pledge
- From
- Government of Japan (Tokyo)
- Covers
- United States government, Washington, D.C.
- Value
- $550B
- Status
- Agreed and put into effect by US executive order on September 4, 2025. On February 20, 2026 the US Supreme Court ruled that the IEEPA emergency law does not authorize tariffs, and the US switched to a temporary 10% global tariff under Section 122. When that expired on July 24, 2026, the US replaced it with a 12.5% Section 301 tariff on Japanese goods; Tokyo said the burden would not exceed the 2025 deal, and auto tariffs stayed at 15%.
- Date
- 2025-07-22
President Trump announced a framework trade agreement with Japan that sets a 15% baseline tariff on most Japanese imports, including cars. In return, Japan committed to $550 billion of investment in U.S. industries chosen by Washington, such as semiconductors, energy, critical minerals, pharmaceuticals and shipbuilding. The White House also said Japan would buy 100 Boeing aircraft and expand imports of U.S. rice and farm goods.
Why it matters
The deal lowered the threatened 25% auto tariff and created a government-backed channel for Japanese capital into U.S. strategic industries. It sets the framework for Japanese investment in the U.S. for years to come.
What was agreed
Executive Order 14345, signed on September 4, 2025 and published in the Federal Register on September 9, set out how the 15% rate works. It is inclusive of the normal MFN duty: goods whose regular rate is below 15% pay an extra duty to bring the total to 15%, while goods already at 15% or more get no additional charge. The rate applied to goods entered on or after August 7, 2025.
Cars and auto parts were also set at 15% including MFN duty, collected under Section 232. Civil aircraft and generic drugs were exempted.
The $550 billion investment
The rules for the $550 billion were set in a memorandum of understanding signed on September 4, 2025, and the first projects were named in two rounds in February and March 2026. Each is covered in its own entry.
What to watch
On February 20, 2026, the U.S. Supreme Court ruled 6-3 in Learning Resources v. Trump that IEEPA does not authorize tariffs, removing the legal basis for the reciprocal tariff that the 15% rate replaced. The administration moved to a temporary 10% global tariff under Section 122 of the Trade Act, which can last only 150 days; President Trump said he would raise it to 15%, but later reports put the rate in force at 10%. Auto tariffs, set under Section 232, were not directly affected. Tokyo said it would keep its investment pledge and asked Washington to ensure Japanese companies were not put at a disadvantage.
The Section 122 tariff expired on July 24, 2026. In its place the U.S. applied Section 301 tariffs of up to 12.5% on goods from 60 countries and regions, citing weak restrictions on imports made with forced labor; Japan's rate is 12.5%. Chief Cabinet Secretary Minoru Kihara called the move regrettable but said the bilateral deal was unchanged, and Akazawa said Japan's burden would not rise. Auto tariffs stayed at 15%, and the U.S. is weighing a second Section 301 action over excess production capacity. Akazawa, now minister of economy, trade and industry, met Lutnick in Washington on September 3, 2026 to review progress on the investment program.
Sources
Kakehashi M&A News home
