Wed, 23 Jul 2025

Wed, 23 Jul 2025 What the US-Japan deal means for Asia and the world

An agreement gives firms certainty after months of chaos from Donald Trump's tariff policy.
US-Japan Trade Deal: Key Points
* The agreement is considered one of the largest trade deals in history, with the US and Japan agreeing on lower tariffs for Japanese exports.
* Japan is the world's fourth-largest economy, and its auto giants like Toyota, Honda, and Nissan are expected to benefit from the deal.
* The US had threatened to impose a 27.5% tariff on Japanese cars, but this has been reduced to 15%.
* In return, Japan has agreed to invest $550bn in the US to build resilient supply chains in key sectors like pharmaceuticals and semiconductors.
* The deal is expected to create jobs, boost innovation, and foster economic growth in both countries.
* Other countries like South Korea and Taiwan are likely to take note of the terms of the agreement as they hold their own trade negotiations with the US.
* Smaller economies like Cambodia, Laos, and Sri Lanka may suffer due to their limited negotiating power. Impact on Global Trade
* The deal is expected to put pressure on other countries to secure better agreements before a 1 August deadline.
* Asian countries like Vietnam, Indonesia, and the Philippines have already announced deals with the US.
* The agreement may lead to a shift in global trade dynamics, with countries seeking more reliable partners. Background
* The US had threatened to impose tariffs on Japanese imports as part of its so-called Liberation Day tariffs in April.
* Japan's Prime Minister Shigeru Ishiba had expressed concerns about the potential impact of these tariffs on the country's economy.
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