US President Trump announced this morning on 7/23 that the US and Japan have reached a trade agreement, with the US imposing a 15% tariff on Japan, while Japan has promised to invest $55 billion, with 90% of the profits belonging to the United States.
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Toggle15% Tariff on Japan Plus $55 Billion Investment, Largest US-Japan Agreement in History
Trump announced at the White House that he has signed the largest trade agreement in history with Japan, emphasizing that the agreement is very beneficial to both parties. He also supplemented on Truth Social that the agreement mainly requires Japan to further open its market, allowing US car imports and more agricultural products like rice to enter Japan. He stated:
"Under my instructions, Japan will pay a 15% reciprocal tariff to the United States and invest $55 billion, with the US gaining 90% of the profits."
However, the details of the agreement have not yet been fully disclosed, and the public is waiting for further explanation from the White House.
Auto Tariffs Become Focus, Japanese Stocks Surge, Prime Minister Ishiba Responds
The most closely watched aspect of this negotiation is the automotive industry. The United States has long had the largest trade deficit with Japan in automobiles and components, accounting for up to 80%.
According to Bloomberg citing NHK, the US will reduce the original 25% auto tariff to 15%. After the news broke, Japanese auto stocks immediately surged, with Toyota's stock price rising over 13% and the TOPIX index rising 3%.
Japanese Prime Minister Ishiba in Tokyo said that the US and Japan have been intensively negotiating and will further deepen cooperation to create more job opportunities and higher-quality products. However, it is still uncertain whether Japanese cars and components will be completely exempt from tariffs or will adopt a quota system, and NHK did not provide more details.
Trade War Layout Continues, Agreement Covers Energy and Investment Incentives
In addition to the trade agreement, the US and Japan will sign a joint development contract for Alaska LNG and consider providing tariff incentives for Japanese car manufacturers in the US to attract more Japanese corporate investment. For example, Isuzu plans to invest $280 million to build a new factory in South Carolina, and Toyota has added $88 million to expand hybrid vehicle capacity.
Japanese Minister for Economic Revitalization Akasaka Ryusei visited the White House on 7/23 to meet with Trump and negotiate with US Treasury Secretary Scott Bessent. He emphasized that the negotiations were very smooth. Earlier this year, Trump had originally threatened to impose a 25% high tariff on Japanese goods, which was reduced to 15% after multiple negotiations by Akasaka.
However, the $55 billion Japanese investment in the US that Trump mentioned is still to be confirmed. This amount may be the total of various investments by Japanese companies in the US over the next few years, such as building factories, expanding production, or purchasing local energy. Trump has always been good at packaging general corporate business activities as his own political achievements. This $55 billion investment is likely to be a similar operation.
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US Treasury Secretary Scott Bessent stated this morning on 7/23 that he will visit Stockholm, Sweden next week for the third round of trade negotiations with China, aiming to extend the tariff truce agreement originally set to expire on 8/12 and expand its content to more sensitive issues. On the eve of the negotiations, China has temporarily suspended the antitrust investigation into the US chemical giant DuPont, which is interpreted by the outside world as a goodwill gesture, and hopes for a cooling of relations between the two sides.
ToggleUS and China to Launch Third Round of Negotiations in Sweden Next Week
Bessent stated that the US-China tariff truce agreement will expire on 8/12, and both parties will conduct the third round of negotiations in Stockholm, Sweden on Monday and Tuesday (7/29, 7/30) to discuss the possibility of extending the agreement and expanding talks to sensitive issues such as China's continued purchase of oil from sanctioned countries like Russia and Iran. Swedish Prime Minister Ulf Kristersson, through a spokesperson, also stated that they will serve as the host, emphasizing that this negotiation is not only crucial for US-China relations but also has significant implications for global trade and economy.
This Sweden meeting is the third round of talks following the Geneva, Switzerland meeting in May and the London, UK meeting in June:
May Geneva Negotiations: Achieved a 90-day pause on high tariffs.
June Geneva Negotiations: US and China mutually relaxed export controls, with the US loosening low-tier semiconductor exports (H20) and China increasing rare earth shipments.
US Softens Stance Towards China, Possibility of Trump-Xi Meeting
He also revealed that the Trump administration has recently softened its stance towards China, not being as tough as with other countries that must sign agreements by the end of the month. However, these countries will face at least a 10% punitive tariff if they do not sign, covering products such as steel, aluminum, automobiles, and components.
On the same day, US President Trump also stated that he does not rule out meeting with Chinese President Xi Jinping in the future, and US Secretary of State Marco Rubio mentioned that both sides have a "strong intention" to arrange a leadership summit.
China Suspends DuPont Antitrust Investigation, Showing Goodwill
Shortly after Bessent's interview discussing the Sweden talks, China announced the suspension of an antitrust investigation into the local subsidiary of the US chemical giant DuPont de Nemours, which is seen as China releasing goodwill and indicating a potential cooling of bilateral relations.
Bessent stated:
"The US-China trade is currently in a good state. What we want to discuss is not just tariffs, but more things we can collaborate on."
What Are the Focused Topics for US-China Negotiations?
Bessent pointed out that based on the experience of Trump's first round of trade war with China, the US may request a reduction in trade deficit with China, asking China to commit to purchasing more US goods and strengthening control of fentanyl precursors entering the US. As for China, the focus of this negotiation may be on securing more advanced process technologies from the US to find new growth momentum for its domestic economy, and requesting the US to further relax export restrictions, especially in AI and chip fields.
Bessent added that the US hopes China will reduce excess capacity and transform to cultivate a domestic consumption market, avoiding an influx of low-priced goods into the international market that could impact local industries in other countries.
Risk Warning
Cryptocurrency investment carries high risks, and its price may fluctuate dramatically. You may lose all your principal. Please carefully assess the risks.
