US President Donald Trump on Tuesday announced a sweeping new trade deal with Japan, terming it as ‘’perhaps the largest Deal ever made.’’ The declaration was made through his social media post, mentioning that the deal would include $550 billion of Japanese investments in the US, along with a reciprocal 15% tariff on imports.

“Japan will invest, at my direction, $550 Billion Dollars into the United States, which will receive 90% of the profits,” Trump stated. He said that the deal will “create hundreds of thousands of jobs” and open Japan’s markets to American exports, including cars, trucks, rice, and other agricultural products. 

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Trump highlighted the diplomatic importance of the deal, mentioning, “This is a very exciting time for the United States of America, and especially for the fact that will continue to always have a great relationship with the Country of Japan.”

The announcement follows a reported meeting conducted between Trump and Japan’s top tariff negotiator, Roysei Akazawa, at the White House on Tuesday, as per the latest report.

No confirmation has been made by either the White House or by Japan’s Finance Ministry. Amid these latest developments, Prime Minister Ishiba finds himself in trouble. As per a report by Youmiuri, he may even decide to resign if the trade deal fails to generate domestic benefits in time.

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Japan and the US agree to lower auto tariffs

As per the latest development reported by Japan’s public broadcaster NHK on Wednesday, the two countries have agreed to reduce the additional 25% tariff on Japanese automobiles.  The revised total rate will now be at 15%, including the original 2.5% tariff. This will reportedly reduce trade tensions on one of Japan’s most crucial export categories.

Mixed reactions from Economists

Economists have shared mixed reactions. Kristina Clifton, Senior Economist at the Commonwealth Bank of Australia, has welcomed the declaration. “Steel, aluminium and also cars are important exports of Japan, so it will be interesting to see if there’s any specific carve-outs,” as quoted by Reuters. She also pointed out that more details are required.

Hirofumi Suzuki, Chief Currency Strategist at SBMC in Tokyo, stated to Reuters, “This is good news for the Japanese economy. However, it alone will not prompt the Bank of Japan to increase interest rates.” He also mentioned that yen pressure is expected to continue amid political uncertainty.