Trump's Japan Trade Deal Explained: What To Know

President Donald Trump announced that the United States and Japan reached a major trade deal that is "perhaps the largest deal ever made. Japan agreed to invest $550 billion in the U.S., which will tax Japanese goods sold to America at 15 percent—lower than the 25 percent tariff Trump had threatened. Japan will also open its economy further to American cars, trucks, rice and agricultural products, Trump announced on Tuesday night.

The agreement signaled a substantial shift in America's trade relationship with one of its most important Asian allies.The trade pact not only averted a significant escalation of tariffs that risked destabilizing markets but also promised to generate investment and reshape sectors such as manufacturing and automotive, which remain vital to the U.S. economy.

The U.S. Census Bureau reported a $69.4 billion trade deficit with Japan in 2024, underlining the economic stakes for both countries.

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