TMTPOST -- Details of a trade agreement released by the White House show the Japanese government has made a staggering commitment to invest hundreds of billions of dollars and concessions on certain sectors such as the auto industry in exchange for a relatively lower reciprocal tariff rate.
Credit：Tasnim
U.S. President Donald Trump on Tuesday announced a “massive” trade deal with Japan, involving $550 billion in investments and a 15% reciprocal tariff on Japanese goods. White House press secretary Karoline Leavitt on Wednesday described the investment as the “centerpiece” of the trade deal with Japan.
In a fact sheet released on Wednesday, the White House called the deal an “unprecedented U.S.–Japan strategic trade and investment agreement”, and confirmed the $550 billion investment commitment from Japan, “the single largest foreign investment commitment ever secured by any country.”
“With over $550 billion in a new Japanese/USA investment vehicle and enhanced access for American exports, this agreement marks a new chapter in bilateral cooperation—one that will unleash the full potential of the U.S. economy, strengthen vital supply chains, and support American workers, communities, and businesses for decades to come,” said the fact sheet.
The fact sheet showcased how the Trump administration plans to take advantage of $550 billion investment commitment from Japan to rebuild and expand core U.S. industries. It said these funds, at Trump’s direction, will be targeted toward the revitalization of America’s strategic industrial base, including energy infrastructure and production, semiconductor manufacturing and research, critical minerals mining, processing, and refining, pharmaceutical and medical production, and commercial and defense shipbuilding.
Trump in his social media post said “Japan will invest, at my direction, $550 Billion Dollars into the United States, which will receive 90% of the Profits. ” The White House in the fact sheet confirmed Japan would leave most of the investment income to the U.S. The United States will retain 90% of the profits from this investment—ensuring that American workers, taxpayers, and communities reap the overwhelming share of the benefit, according to the fact sheet.
Japanese Prime Minister Shigeru Ishiba on Wednesday confirmed the agreement to set tariffs at 15%, including the exsiting rate. He told reporters that the 15% rate was the lowest so far among countries that have a trade surplus with the U.S., thus “ we have achieved the greatest results.” Ishiba said Japan’s auto exports to U.S. will face a 15% tariff rate, down from the current 25% levied across countries, according to Reuters.
As part of the agreement, imports from Japan will be subject to a baseline 15% tariff rate, according to the fact sheet from the White House, without listing the current sectoral tariffs that would be adjusted under the agreement. In addition to the 10% worldwide baseline tariffs, Japan now faces a 25% U.S.-imposed tariff on automobiles and auto parts, and a 50% tariff on steel and aluminum.
Trump in his post on Tuesday said what seems to be most important that the deal brings about is that Japan will open up its market to U.S. cars and agricultural products including the rice. The White House in its fact sheet claimed the agreement delivers “breakthrough openings” across key sectors.
In agriculture and food, Japan under the deal will increase imports of U.S. rice by 75% and purchase $8 billion in U.S. goods, including corn, soybeans, fertilizer, bioethanol, and sustainable aviation fuel, per the fact sheet. It said U.S. will massively expand energy exports to Japan, without provide any numbers to quantify the expansion. As part of cooperation in energy, both countries are exploring a new offtake agreement for Alaskan liquefied natural gas (LNG).
To promote American manufacturing and aerospace, Japan has committed to purchase U.S.-made commercial aircraft, including an agreement to buy 100 Boeing aircraft. Japan will also purchase additional billions of dollars worth of U.S. defense equipment annually to enhance interoperability and alliance security in the Indo-Pacific.
To improve imports of U.S. automobiles, Japan will lift longstanding restrictions on U.S. cars and trucks, granting U.S. automakers access to the Japanese consumer market. The Asian ally will for the first time approve U.S. automotive standards. It also vows to grant broader openings for a range of industrial and consumers goods, leveling the playing field for American producers.
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