The United States and Japan reached an agreement on new tariff rates on Tuesday (local time) after three months of negotiations that began in April 2025.

The reciprocal tariff rate between the two countries was set at 15 percent, 10 percentage points lower than the 25 percent proposed by U.S. President Donald Trump in his earlier “tariff letter.”

The two countries also agreed to reduce the tariff rate on automobiles - a key issue in trade negotiations with other countries such as South Korea and the European Union - from the current 25 percent to 12.5 percent, effectively halving it.

This development is expected to serve as a benchmark in future trade negotiations between Korea and the United States.

Trump announced on his social media platform, Truth Social, that “we just completed a massive Deal with Japan, perhaps the largest Deal ever made,” adding, “Japan will invest, at my direction, $550 Billion Dollars into the United States, which will receive 90% of the Profits.”

He further stated, “Perhaps most importantly, Japan will open their Country to Trade including Cars and Trucks, Rice and certain other Agricultural Products, and other things. Japan will pay Reciprocal Tariffs to the United States of 15%.”

For his part, Japanese Prime Minister Shigeru Ishiba held a press conference on Wednesday and confirmed that an agreement had been reached to cut the tariff rate on automobiles - a topic the Trump administration had previously resisted - by half.

The tariff on Japanese cars, which has been set at 25 percent since April 2025, will be reduced to 12.5 percent, bringing the total tariff rate on Japanese automobiles exported to the United States to 15 percent, including the existing 2.5 percent.

While Trump mentioned “agricultural market opening,” Ishiba clarified that Japan’s reduction of agricultural tariffs was not included in the agreement.

Regarding imports of U.S. rice, the Japanese prime minister explained that Japan would secure the necessary amount of rice within the framework of the so-called Minimum Market Access (MMA) quota system, under which the government is required to import a minimum quantity.

“Within this framework, we will increase the proportion of U.S. rice procurement,” he added.

As for tariffs on steel and aluminum, the previously applied rate of 50 percent will remain in place.

The news of the U.S.-Japan tariff deal raised the level of tension in the Korean government ahead of its own tariff negotiations with the United States.

Government officials on Wednesday were busy sharing and analyzing the results of the U.S.-Japan agreement, as well as reviewing their negotiation strategies and options for Korea-U.S. talks.

Deputy Prime Minister and Minister of Economy and Finance Koo Yun-cheol and Trade Minister Yeo Han-koo will meet with U.S. Treasury Secretary Scott Bessent and U.S. Trade Representative (USTR) Jamieson Greer on Friday (local time).

Given that the August 1st, 2025 deadline for the reciprocal tariff deferral approache, a final round of negotiations with the United States is expected to take place.

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