Donald Trump announced a historic trade agreement with Japan with new tariffs.

The tariff plan implemented by President Donald Trump reached another milestone this Tuesday night when the president announced a new trade agreement with Japan, which, in his own words, represents “perhaps the largest deal ever made” between the two countries.

During an event at the White House with Republican lawmakers, Trump revealed that the pact includes the imposition of a reciprocal 15% tariff on Japanese imports to the United States, along with a promise of Japanese investment of $550 billion on American soil.

The agreement comes after a meeting between Trump and Ryosei Akazawa, Japan's chief trade negotiator. Although the announcement was broad in its claims, an official document detailing the exact terms of the pact hasn't been published yet.

A historic agreement

Trump celebrated the pact as a historic achievement and a victory for the U.S. economy.

“This agreement will create hundreds of thousands of jobs. Japan will open its country to trade, including cars, trucks, rice, and certain agricultural products,” Trump wrote on Truth Social.

The Republican leader added that his country will receive “90% of the profits”, although he didn't explain how those benefits would be calculated or how the investments would be structured.

One of the central elements of the announcement was the establishment of the 15% tariff on Japanese products. Previously, Japanese goods had faced a temporary 24% tariff, which was later reduced to a minimum of 10% in April after a 90-day pause.

With the new agreement, the rate is formalized at 15%. Nevertheless, the announcement didn't include any mention of the elimination or reduction of the 25% tariff that currently affects Japanese automobiles, one of the main export products from the Asian country to the United States.

The importance of Japan as a trade partner

Japan is the fifth-largest supplier of goods to the United States, with exports valued at $148 billion in 2023. Among the most relevant products are automobiles, agricultural and construction machinery, and electronic components.

Meanwhile, the United States exported nearly $80 billion to Japan last year, mainly in oil, gas, pharmaceutical, and aerospace products.

In July, Trump sent a letter to Japanese Prime Minister Shigeru Ishiba, warning that the United States would apply a 30% tariff starting August 1 if a tariff agreement between the parties was not reached soon.

Additionally, the White House has tried to persuade allies like Japan to reduce their trade relations with China as part of a global pressure strategy against Beijing.

It is worth noting that Japan, in addition to being a key trade partner, is also the largest foreign creditor of the United States, with more than $1.1 trillion in U.S. Treasury bonds.