U.S.–Japan Trade Agreement Finalized: Steel Tariffs Remain, Auto Tariffs Cut to 15%; $550B Investment Announced

Key Takeaways:Steel and aluminum tariffs remain unchanged at 50%Automobile tariffs cut from prior levels to 15%Japan to boost U.S. rice imports under quota agreement$550 billion Japanese investment in the U.S. announced by TrumpMixed reactions from markets and analysts; BOJ policy implications debatedThe United States and Japan have finalized a new bilateral trade agreement that maintains existing 50% tariffs on steel and aluminum but reduces tariffs on automobiles to 15%, according to a report by Jinshi Data.As part of the deal, Japan has committed to increasing U.S. rice imports under its minimum market access quota system, signaling agricultural cooperation amid broader trade adjustments.Trump Announces $550 Billion Investment DealFormer U.S. President Donald Trump stated that Japan will invest $550 billion into the U.S. economy, claiming that the U.S. will retain 90% of the profits generated. The statement drew mixed responses, with Saxo Bank referring to the figure as a “political show,” while acknowledging that the tariff reduction on autos is economically rational.Market and Institutional ReactionsThe agreement’s economic impact appears mixed, particularly for Japan:Commonwealth Bank of Australia warned that maintaining high steel tariffs could place Japan’s fiscal outlook under pressure, potentially weakening the yen.Citigroup viewed the deal as positive for removing trade uncertainty, which may stabilize business planning.Sony Financial Group described the agreement as “mixed” for Japanese equities, citing conflicting signals for industrial and export-heavy sectors.Some analysts believe the trade resolution could provide a window for the Bank of Japan (BOJ) to raise interest rates, depending on how the yen and export dynamics evolve post-deal.