U.S. President Donald Trump signed an executive order on Thursday to implement lower auto tariffs on Japanese car imports. The order follows a trade deal reached in July and aims to ease pressure on Japan’s export-driven economy.
The new rules cut auto tariffs from 27.5% to 15%. The changes will take effect seven days after the order is officially published. Trump’s decision provides clarity for Japan’s auto industry, which has struggled under higher U.S. tariffs.
The agreement also prevents the 15% rate from being added on top of existing higher tariffs on goods like beef. For items with lower tariffs, rates will be adjusted to 15% retroactive to August 7. Commercial airplanes and parts are exempt from new tariffs under the order.
The trade deal is broader than auto tariffs alone. Japan agreed to invest $550 billion in U.S. projects through equity, loans, and guarantees. Purchases of U.S. farm products, including corn, soybeans, fertilizer, and bioethanol, will also increase.
Shares of Japanese automakers rose slightly after the announcement. Toyota welcomed the deal, saying it provides “much needed clarity” for its U.S. operations. Nearly 80% of Toyota cars sold in the United States are produced in North America.
Japan also agreed to buy 100 Boeing planes and raise annual defense spending with U.S. firms to $17 billion. The White House said the agreement strengthens economic ties between the two nations, which had total trade worth $230 billion in 2024.
Trump’s order noted that the United States may change the agreement if Japan fails to meet its commitments. Analysts say the reduction in auto tariffs will help stabilize Japan’s car exports while boosting U.S. agriculture and defense industries.
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