Trump announces massive' trade deal with Japan, setting tariffs at 15%

• Trump said that Japan will invest $550 billion into the United States, adding that the U.S. will “receive 90% of the Profits.”
• He also said Japan will “open their Country to Trade including Cars and Trucks, Rice and certain other Agricultural Products, and other things.”
• Shortly after the announcement, Japan's top trade negotiator, Ryosei Akazawa, said “#Mission Accomplished,” in a post on X.

U.S. President Donald Trump on Tuesday stateside announced a “massive” deal with Japan, that involves “reciprocal” tariffs of 15% on the country's exports to the U.S, with auto duties reportedly being lowered to that level as well.

In a post on Truth Social, Trump labeled the agreement as “perhaps the largest Deal ever made,” while adding that Japan will invest $550 billion into the United States and the U.S. would “receive 90% of the Profits.”

Trump said that Japan will “open their Country to Trade including Cars and Trucks, Rice and certain other Agricultural Products, and other things.”

The U.S. president added that the deal would create “Hundreds of Thousands of Jobs.”

Shortly after the announcement, Japan's top trade negotiator, Ryosei Akazawa, said “#Mission Accomplished,” in a post on X, and expressed “heartfelt thanks to everyone involved,” according to a google translation of his remarks in Japanese.

Japanese Prime Minister Shigeru Ishiba said that auto tariffs on Tokyo will be lowered to 15% — from the current 25% levied across countries — Reuters reported. Auto exports to the U.S. are a cornerstone of Japan's economy, making up 28.3% of all shipments in 2024, according to customs data.

Japanese exports of automobiles, which include cars, buses and trucks, to the U.S. fell 26.7% in June, extending May's 24.7% plunge.

The country's overall exports to the U.S. — its second largest trading partner — stood at 10.3 trillion yen ($70.34 billion) between January to June, a 0.8% year-on-year drop.

Trump in a speech that followed his Truth Social post said that Japan and the U.S. were also concluding an additional deal involving liquified natural gas, adding that “we have [a] Europe [deal] coming in tomorrow,” without specifying any details.

“A year ago, that level of tariffs [15%] would be shocking. Today, we breathe a sigh of relief,” Brian Jacobsen, chief economist at Annex Wealth Management, told CNBC.

In his tariff letter sent to Japan earlier this month, Trump had threatened 25% levies on the country's exports from Aug. 1, one percentage point higher from the 24% rate announced during his April 2 “Liberation Day” tariffs.

Tuesday's announcement comes just days after Ishiba's governing coalition lost its majority in the country's upper house elections that had raised worries of undermining the country's negotiating position with the U.S.

HSBC said in a note Monday that “For Prime Minister Ishiba, a favourable U.S. trade deal could help stave off a no-confidence motion or internal challenge from the LDP [Liberal Democratic Party].”

Ishiba had said after the upper house loss that he would stay on as prime minister, but Japanese media outlet Yoimuri reported early Wednesday that he would decide whether to stay on his position after assessing the progress of the tariff negotiations, according to a Google translation of the report in Japanese.

Japan's markets jumped after the announcement, with major auto stocks spiking, some over 10%, and the broader Nikkei 225 up over 2%.

Shares in Japan's Honda rose more than 8%, while Toyota climbed above 11%. Nissan jumped more than 8%, and Mazda Motor surged over 17%. Mitsubishi Motors popped 13%.

Jeremy Schwartz, global CIO at asset manager Wisdomtree told CNBC's “Squawk Box Asia” that the size of the market reaction meant that the market “got very pessimistic on how things were progressing, overly pessimistic.”

Schwartz also said Trump was using these deals to not just even out the trade deficit, but also to drive strategic spending in the U.S., such as a planned investment by Softbank, OpenAI and Oracle of up to $500 billion in artificial intelligence infrastructure over the next four years.

He called the trade deal with Japan as having “some of the best terms” from any of the major countries.