Trade Agreements Between the U.S., Japan, and Indonesia: Reduction of Tariffs and Billions in Investments

SadaNews - The United States and Japan have reached an agreement to reduce the exorbitant tariff rates that President Donald Trump threatened to impose on its Asian ally's goods, which includes a commitment from Japan to invest $550 billion in the United States.

The deal, which includes a tariff rate of 15 percent on Japanese exports to the U.S. down from the previously proposed 25 percent, is the most significant in a series of trade deals the White House has reached ahead of the deadline for imposing higher tariffs set for August 1.

Trump stated on Truth Social, "I just signed the largest trade agreement in history with Japan. This is a very special time for the United States of America, especially as we will always maintain an excellent relationship with Japan."

Japanese Prime Minister Shigeru Ishiba, facing political pressure after a significant election defeat on Sunday, praised the agreement, describing it as "the least amount among countries with a trade surplus with the United States."

Ishiba added that both sides also agreed to reduce existing tariffs on Japanese cars from 25 to 15 percent. Automotive exports account for more than a quarter of Japan's exports to the United States.

The Japanese Nikkei Index Rises to Its Highest Level in a Year

Japanese automotive companies led the Nikkei index of Japanese stocks to rise to its highest level in a year on Wednesday, while bonds fell after Tokyo reached a trade agreement with Washington, ending a months-long impasse.

The Nikkei rose by as much as 3.3 percent to 41,070.91 points, the highest level since July of last year.

Markets largely ignored a media report stating that Prime Minister Shigeru Ishiba would resign by the end of August.

Agreement with Indonesia

In a related context, Trump announced yesterday (Tuesday) the signing of a new trade agreement with Indonesia, describing it as a "model of the necessary balance between economic protection and free exchange." Trump stated during an election rally in Ohio that the agreement proves that "America First does not mean America alone," emphasizing that Washington will maintain a 19% tariff rate only on Indonesian goods, whereas expectations had pointed to a 32% tariff as part of unified tariff policy.

The agreement includes Indonesia purchasing dozens of Boeing aircraft and importing American agricultural and energy products valued at over $20 billion, along with opening Indonesian markets to American companies under more flexible terms. Reuters reported from U.S. Commerce Department officials that this move came after weeks of negotiations during which Washington threatened to impose retaliatory tariffs on Indonesian furniture, rubber, and clothing.