President Trump on Thursday signed an executive order implementing the previously announced U.S.-Japan trade deal, officially cutting auto tariffs and providing immediate relief to Japanese automakers who have faced billions in additional costs.
The details: The executive order formalizes the agreement first announced in July, per Reuters.
The deal slashes the current 27.5% tariff on vehicles shipped from Japan to the U.S. to 15%.
Japan reaffirmed its commitment to invest $550 billion in U.S. projects and expand imports of U.S. rice and agricultural products.
The order ensures the 15% levy won't stack on top of existing higher tariffs on items like beef, while products previously subject to tariffs below 15% are adjusted to the new rate.
Why it matters: The 15% tariff rate allows major Japanese automakers like Toyota, Honda, and Nissan to significantly reduce their import cost burden, helping them remain price-competitive in the U.S. market. This provides crucial relief for dealer networks already adapting to shifting consumer demand, tighter margins, and supply chain volatility.
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The impact: Japanese automakers had been facing massive tariff-related costs that are now substantially reduced:
Toyota, which flagged a nearly $10 billion profit hit from tariffs, praised the deal while noting that "nearly 80% of the vehicles Toyota sells in the U.S. are made in North America."
Honda had expected about $3 billion in added costs tied to tariffs this year.
Nissan estimated a $2.1 billion impact by March 31 from the levies.
Bottom line: After months of uncertainty, the signed executive order provides immediate clarity and financial relief to Japanese automakers by nearly halving tariffs. The deal reduces billions in projected costs, stabilizes operations, and helps maintain competitiveness in the U.S. market while confirming Japan's massive investment commitment to American projects.
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