US and Japan Strike ‘Massive’ Trade Agreement

The United States has reached a trade agreement with Japan that exchanges Japanese foreign investment in the U.S. for a lower tariff rate.

President Trump announced the deal at an event for Republicans in Congress last night and on Truth Social, Trump’s social media platform.

In exchange for a $550 billion investment and loan package to the United States, Japanese goods exported to the United States will be subject to a 15% tariff, 10 percentage points lower than the tariff rate Trump outlined in a bizarre letter he sent to Japan’s prime minister earlier this month. Of course, this 15% rate is still higher than the 10% tariff currently imposed on most Japanese goods.

“We just completed a massive Deal with Japan, perhaps the largest Deal ever made. Japan will invest, at my direction, $550 Billion Dollars into the United States, which will receive 90% of the Profits. This Deal will create Hundreds of Thousands of Jobs — There has never been anything like it,” Trump wrote on Truth Social. “Perhaps most importantly, Japan will open their Country to Trade including Cars and Trucks, Rice, and certain other Agricultural Products, and other things. Japan will pay Reciprocal Tariffs to the United States of 15%.”

“This is a very exciting time for the United States of America, and especially for the fact that we will continue to always have a great relationship with the Country of Japan. Thank you for your attention to this matter!”

At the gathering of Republicans at the White House, Trump described the deal as “they say, the biggest deal ever made, biggest deal ever made.”

It is worth noting that the 15% tariff rate also applies to automobiles and associated products, including car parts. This deal gives Japanese auto manufacturers a significant advantage over their non-American competitors, as many vehicle makers, including those in South Korea and Europe, are slated to face 25% (or higher) tariff rates in just over a week.

Japanese stock markets reached their highest levels in a year following the announcement of the trade deal.

Japan’s Trade Minister, Ryosei Akazawa, hailed the deal as a significant success and described the $550 billion investment and loan package as directly related to Japanese business investments in the United States, including those in the technological and medical sectors.

As for the photography industry, the new trade deal is mostly good news. For photography companies themselves, this will enable them to operate in the United States with greater stability and predictability. While a 15% tariff is significantly worse than 0% or even 10%, it is preferable to 25% and should, at least for a while, remain stable.

However, despite Trump’s frequent claims that tariffs are paid by the exporting country, in this case, “Japan will pay Reciprocal Tariffs to the United States of 15%,” that is not how tariffs actually work. The exporting country does not pay tariffs; instead, they are paid by the importer, whether an individual or a business. U.S.-issued tariffs are first and foremost a tax on American consumers and businesses, not foreign countries.

There are cascading effects, including consequences for the exporting nation, but when a Japanese camera company’s exports to the U.S. are subject to tariffs, for example, American photographers foot the bill, as has already been shown repeatedly.

It remains to be seen how quickly Japanese companies will react to the new tariffs through price adjustments, but at the very least, they can now operate in the U.S. with some level of certainty, which has been exceptionally difficult to come by in 2025.

Image credits: Header photo licensed via Depositphotos.