Business reporter, BBC News
US President Donald Trump says the US has agreed to a “massive” trade deal with Japan, one of the country’s largest trading partners.
The plan would result in Japan investing $550bn (£407bn) into the US and paying a 15% reciprocal tariff, Trump said in a post on social media.
He added that Japan would open its economy to US goods, including cars, trucks, rice and certain agricultural products.
Japan’s Prime Minister Shigeru Ishiba welcomed the announcement, saying it was “the lowest figure to date among countries with trade surpluses with the US”.
“I just signed the largest trade deal in history, I think maybe the largest deal in history with Japan,” Trump touted at a White House event on Tuesday evening.
“They had their top people here, and we worked on it long and hard. And it’s a great deal for everybody. I always say it has to be great for everybody. It’s a great deal,” he added.
Trump also said that a trade agreement with the European Union would be announced on Wednesday, with more deals due soon.
Speaking to reporters on Wednesday, Ishiba said the agreement would mean US tariffs on vehicles and parts would be cut to 15% from 25%.
“We were the first in the world to reduce tariffs on cars and auto parts without any quantity restrictions,” he said.
“The agreement does not include any reduction of tariffs on the Japanese side,” Ishiba added.
The BBC has reached out to the White House and Japan’s embassy in Washington for more details of the trade agreement.
Bringing its main tariff rate down to 15% is Japan’s “best compromise at this stage”, Shigeto Nagai from research firm Oxford Economics told BBC News.
The planned investment in the US by Japan included in the announcement “will be a huge boost to restore the US, fitting in with Trump’s story of reviving US manufacturing with more jobs,” he added.
Getty ImagesIn a letter sent to Japan this month, Trump threatened a 25% tariff on the country’s exports to the US if there wasn’t a new trade deal struck before 1 August.
That was one percentage point higher from the 24% rate announced during his so-called Liberation Day on 2 April.
The April tariffs plan, which included duties on many US trading partners across the globe, were paused for 90 days following worldwide market turmoil. It allowed Tokyo’s trade representatives time to negotiate with their counterparts in Washington.
Japan’s benchmark share index, the Nikkei 225, was more than 3% higher on Wednesday in Tokyo, with strong gains for shares in motor industry giants – including Toyota, Nissan and Honda.
The apparent deal comes as Ishiba is under pressure to step down after his Liberal Democratic Party (LDP) lost its majority in the country’s upper house in elections over the weekend.
The LDP had already lost its majority in Japan’s more powerful lower house last year.
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