US-Japan Trade Deal

Extracted Attributes

• Type

  Proposed Trade Agreement

• Parties Involved

  United States, Japan

• Strategic Context

  US economic strategy to win the global AI Arms Race against China

• Japanese Contribution

  $550 billion

• Supporting US Policies

  Tariffs for onshoring, 100% immediate expensing, Permitting Reform for energy production (Natural Gas, Nuclear Energy)

• International Trade Approach

  Transactional, including AI Economic Zones for trusted partners and 'Above the line/below the line policy' for China

• Associated US Economic Strategy

  Sparking a Capex Boom via AI factories and a Productivity Boom

• Purpose of Japanese Contribution

  Fund a National Security Sovereign Wealth Fund for strategic American projects

• Key Proponent (potential administration)

  Howard Lutnick (potential Secretary of Commerce)

Timeline

• The US-Japan Trade Deal, involving Japan providing $550 billion for a National Security Sovereign Wealth Fund, is proposed as a key part of a potential Donald Trump administration's strategy to win the global AI Arms Race. (Source: Document 6fe8de57-cccf-428f-9e98-50534833bad5)

  Proposed

• The United States and Japan reached an agreement on market access for certain agricultural and industrial goods. The Japanese Legislature approved this agreement on December 5, 2019, and it went into effect following Presidential Proclamation 9974 on December 26, 2019. (Source: U.S. Customs and Border Protection, USTR)

  2019-10-07

• President Donald Trump announced a trade agreement with Japan that included lowering tariffs on auto imports to 15% and cutting duties on other Japanese goods to 15%. (Source: CNN, Reuters)

  2025-07-22

Japan–United States relations

International relations between Japan and the United States began in the late 18th and early 19th century with the diplomatic but force-backed missions of U.S. ship captains James Glynn and Matthew C. Perry to the Tokugawa shogunate. Following the Meiji Restoration, the countries maintained relatively cordial relations. Potential disputes were resolved. Japan acknowledged American control of Hawaii and the Philippines, and the United States reciprocated regarding Korea. Disagreements about Japanese immigration to the U.S. were resolved in 1907. The two were allies against Germany in World War I. From as early as 1879 and continuing through most of the first four decades of the 20th century, influential Japanese statesmen such as Prince Iesato Tokugawa (1863–1940) and Baron Eiichi Shibusawa (1840–1931) led a major Japanese domestic and international movement advocating goodwill and mutual respect with the United States. Their friendship with the U.S. included allying with seven U.S. presidents – Grant, Theodore Roosevelt, Taft, Wilson, Harding, Hoover, and Franklin D. Roosevelt. It was only after the passing of this older generation of diplomats and humanitarians, along with the evidence that many Americans believed all Asians to be alike with President Calvin Coolidge's signing of the Immigration Act of 1924 that Japanese militarists were able to gain control and pressure Japan into joining with the Axis Powers in World War II. Starting in 1931, tensions escalated. Japanese actions against China in 1931 and especially after 1937 during the Second Sino-Japanese War caused the United States to cut off the oil and steel Japan required for their military conquests. Japan responded with attacks on the Allies, including the attack on Pearl Harbor, which heavily damaged the US naval base at Pearl Harbor, opening the Pacific theater of World War II. The United States made a massive investment in naval power and systematically destroyed Japan's offensive capabilities while island hopping across the Pacific. To force a surrender, the Americans systematically bombed Japanese cities, culminating in the atomic bombings of Hiroshima and Nagasaki in August 1945. Japan surrendered, and was subjected to seven years of military occupation by the United States, during which the Americans under General Douglas MacArthur eliminated militarism and rebuilt the country's economic and political systems. In the 1950s and 1960s Japan entered into a military alliance with the United States, and experienced unprecedented economic growth by sheltering under the U.S. nuclear umbrella, taking full advantage of U.S.-backed free trade schemes, and supplying American wars in Korea and Vietnam. Japanese exports to the United States dramatically expanded in the postwar period, with Japanese automobiles and consumer electronics being especially popular, and Japan became the world's second largest economy after the United States. (In 2010, it dropped to third place after China.) From the late 20th century and onwards, the United States and Japan have had firm and active political, economic and military relationships. US government officials generally consider Japan to be one of its closest allies and partners. Most Americans generally perceive Japan positively, with 84% viewing Japan favorably in 2021; however, few Americans consider Japan one of their closest allies in public opinion polls, with only 1% of Americans picking Japan as their most important foreign policy partners, far behind other key American allies, according to a 2021 Pew Research Center survey. In a New York Times analysis of YouGov data in 2017, American survey respondents ranked Japan as their 21st closest ally, also behind other key American allies. According to a 2025 Pew survey, 55% of Japanese view the United States favorably, while 44% view it unfavorably.

Web Search Results

• Assessing the U.S.-Japan Trade Deal Announcement

  On July 22, it was announced that the United States and Japan had reached a trade deal after several months of active negotiations. The agreement is the most substantial struck so far by the Trump administration in terms of trade volume, and Prime Minister Shigeru Ishiba has claimed it as a significant diplomatic achievement in the wake of his party’s defeat in Japan’s upper house election on July 20. While details have yet to be released, the deal appears to address some of the major demands [...] Japan. For many stakeholders in U.S.-Japan relations, the announcement of this deal comes as a relief, as it may enable the two countries to move forward with cooperative bilateral endeavors related to economic security, the U.S.-Japan alliance, and other matters that have been sidelined by tariff issues since the beginning of the Trump administration. However, additional challenges lie ahead. The U.S. government has already indicated that it expects greater burden sharing from Japan and other [...] A3: Due to the broad nature of the U.S.-Japan trade deal, further details related to investment and other elements will need to be clarified moving forward. The precedent set by the U.S.-Japan deal is likely to provide a new negotiating target for South Korea, the European Union, and other countries that are trying to strike their own deals with the United States before the August 1 deadline, as well as for U.S. negotiators who may want to encourage investment pledges similar to that offered by

• US-Japan trade deal averts worst for global economy | Reuters

  FRANKFURT, July 23 (Reuters) - Japan's trade agreement with the U.S. could serve as the benchmark for many other deals currently being negotiated with Washington, and the global economy could just about support the 15% level agreed overnight, economists said. Tokyo's deal with the U.S. lowers tariffs on auto imports to 15% from levies totalling 27.5% previously. Duties that were due to come into effect on other Japanese goods from August 1 will also be cut to 15% from 25%. [...] [1/2]Honda and Tesla vehicles are lined up at a vehicle storage yard at an industrial port, on the day U.S. President Donald Trump struck a trade deal with Japan that lowers tariffs on auto imports, in Yokohama, near Tokyo, Japan, July 23, 2025. REUTERS/Kim Kyung-Hoon Purchase Licensing Rights, opens new tab "It looks like the benchmark for major economies is going to be 10-15% and a somewhat higher level for smaller economies," Derek Halpenny, head of research at MUFG in London, said. [...] Item 1 of 2 Honda and Tesla vehicles are lined up at a vehicle storage yard at an industrial port, on the day U.S. President Donald Trump struck a trade deal with Japan that lowers tariffs on auto imports, in Yokohama, near Tokyo, Japan, July 23, 2025. REUTERS/Kim Kyung-Hoon

• Trump announces 'massive' trade agreement with Japan - CNN

  00:46 - Source: CNN Trump announces US-Japan trade deal 00:46 CNN— President Donald Trump announced a long-awaited trade agreement with Japan on Tuesday night, a framework between allies and major trading partners that appeared elusive just weeks ago. “I just signed the largest trade deal in history; I think maybe the largest deal in history with Japan,” Trump said during a reception with Republican members of Congress Tuesday night. [...] “They had their top people here, and we worked on it long and hard. And it’s a great deal for everybody.” Ad Feedback Ad Feedback The deal will see US importers pay 15% “reciprocal” tariffs on Japanese goods exported to the United States. But importantly for Japan, the 15% rate will also extend to automobiles and car parts - putting it at an advantage over other major vehicle exporters, which have faced a 25% levy on automotive sector exports since April. [...] Japan has been in an uncomfortable position, since China is its top trading partner and the Trump administration had been looking to pressure allies to reduce their levels of trade with China to get a trade deal with the US, according to multiple reports. The latest agreement between the US and Japan follows an expanded trade agreement the two countries signed in 2019, which went into effect the subsequent year and allowed for more goods to be shipped duty-free.

• Japan Trade Agreement | U.S. Customs and Border Protection

  The United States and Japan have achieved a trade agreement regarding market access for certain agricultural and industrial goods, with plans to pursue subsequent negotiations for an expanded free trade agreement. On October 07, 2019, the United States and Japan reached an agreement on market access for certain agriculture and industrial goods. The Japanese Legislature approved the agreement on December 5, 2019. Presidential Proclamation 9974 was issued on December 26, 2019 establishing an

• FACT SHEET on U.S.-Japan Trade Agreement - USTR

  The United States will provide tariff elimination or reduction on 42 tariff lines for agricultural imports from Japan valued at $40 million in 2018, including products such as certain perennial plants and cut flowers, persimmons, green tea, chewing gum, and soy sauce. The United States will also reduce or eliminate tariffs on certain industrial goods from Japan such as certain machine tools, fasteners, steam turbines, bicycles, bicycle parts, and musical instruments. [...] The United States and Japan have reached an agreement in which Japan will eliminate or lower tariffs for certain U.S. agricultural products. For other agricultural goods, Japan will provide preferential U.S.-specific quotas. Once this agreement is implemented, over 90 percent of U.S. food and agricultural products imported into Japan will either be duty free or receive preferential tariff access. For example, under the agreement, Japan will: [...] Under President Trump’s leadership, the United States and Japan have reached agreement on early achievements from negotiations in the areas of market access for certain agriculture and industrial goods, as well as on digital trade. The United States looks forward to further negotiations with Japan for a comprehensive agreement that addresses remaining tariff and non-tariff barriers and achieves fairer, more balanced trade. 1. LIBERALIZING MARKET ACCESS BETWEEN THE UNITED STATES AND JAPAN