United States Formalizes Trade Agreement With Japan

On Sept. 4, President Donald Trump announced that, through an executive order, he had formalized a trade agreement with Japan.

Under the pact, “nearly all” imports coming into the United States from Japan will be charged a 15 percent tariff , including automobiles and auto parts. There will be separate sector-specific tariff treatment for steel and aluminum, copper, certain aerospace products, generic pharmaceuticals, generic pharmaceutical ingredients, and unavailable natural resources. (More specifically, the order repeals Section 232 steel, aluminum, and copper tariffs from applying to imports from Japan covered by the World Trade Organization Agreement on Trade in Civil Aircraft.)

For goods that are typically charged a penalty lower than 15 percent, the U.S. government will add an ad valorem duty to reach the new rate.

The order also indicates the U.S. Secretary of Commerce may issue rules for determining what are eligible “products of Japan.” The 15 percent tariff will apply retroactively to products entered for consumption or withdrawn from warehouse for consumption on or after 12:01 a.m. EDT on Aug. 7, 2025.

According to the executive order, the Japanese government also will:

• Make stable and long-term incremental purchases of U.S. energy, including liquified natural gas, totaling $7 billion per year;
• Recognize U.S. automotive standards and lift longstanding restrictions on U.S. car and truck imports;
• Provide clean energy vehicle introduction promotion subsidies for U.S. cars; and
• Make $550 billion in investments into the United States toward critical industries of importance to our national and economic security, including semiconductors, pharmaceuticals, metals, critical minerals, shipbuilding, energy and energy pipelines, and artificial intelligence and quantum computing.