Home > National > Politics

Trump inks executive order on Japan trade deal that lowers auto tariffs to 15 percent

Published: 05 Sep. 2025, 09:28

U.S. President Donald Trump speaks during a cabinet meeting in the Cabinet Room of the White House in Washington on Aug. 26. [AFP/YONHAP]

U.S. President Donald Trump signed an executive order Thursday to implement a trade deal with Japan, under which his administration will apply a lowered tariff of 15 percent to Japanese automobiles and auto parts.

The signing came as Washington and Tokyo engaged in follow-up talks to bridge their differences over specifics of a framework trade agreement that was announced on July 22, days before Korea and the United States reached their deal.

According to the order, the United States will lower tariffs on Japanese automobiles and parts to 15 percent from the current 27.5 percent — the rate that comprises the existing 2.5 percent tariff and the global sector-specific duty of 25 percent.

The lowering of auto tariffs requires an administrative process, which Trump ordered to proceed within seven days of the date of the order's official publication in the Federal Register.

The order also provides a definition of reciprocal tariffs on Japan following a dispute over whether the across-the-border levies will be stacked on top of the existing duties on Japan, which are higher than those on Korea, a country that has a free trade agreement with the United States.

The order stipulates that for a Japanese product with an existing duty of less than 15 percent, the total sum, including the reciprocal tariff, will be 15 percent, and for a product with an existing levy of at least 15 percent, the reciprocal tariff will be zero percent.

This will apply retroactively to Japanese products entered for consumption on or after 12:01 a.m. on Sunday.

Moreover, the order authorizes the commerce secretary to modify the reciprocal tariff rate to zero percent for Japanese products that are natural resources unavailable in the United States as well as generic pharmaceuticals, generic pharmaceutical ingredients and generic pharmaceutical chemical precursors.

The order also mentioned Japan's agreement to invest $550 billion in the U.S. -- investments that it said will be selected by the U.S. government.

Yonhap