Executive summary

On 4 September 2025, United States (US) President Donald J. Trump issued an Executive Order "Implementing the United States-Japan Agreement," which was initially framed on 22 July 2025. The Executive Order describes the agreement as designed to establish a new era of trade relations between the US and Japan, grounded in principles of reciprocity and shared national interests. Further, the agreement aims to reduce the US trade deficit with Japan, boost the US economy and strengthen the manufacturing and defense industrial base.

The agreement includes a comprehensive tariff framework to level the playing field for American producers while addressing national security needs, the Executive Order explains. It also reflects Japan's commitment to enhancing market access for US goods and services.

Key provisions of the Executive Order

General tariffs

The US will apply a baseline 15% percent tariff on nearly all imports from Japan. The specific tariff rates will be determined based on the product's current ad valorem (or ad valorem equivalent) rate under the Harmonized Tariff Schedule of the United States (HTSUS):

• For products with an HTSUS rate less than 15%, the total tariff will be set at 15%.
• For products with an HTSUS rate of 15% or higher, the additional tariff will be zero.

The agreement includes separate provisions for automobiles, aerospace products, generic pharmaceuticals and natural resources not produced in the US. These sectors will have tailored tariff treatments to promote fair trade.

Tariff reductions on automobiles and parts

The Executive Order outlines that the additional Section 232 tariffs imposed on Japanese automobiles and automobile parts will be adjusted based on each product's HTSUS rate:

• No Section 232 tariffs will apply to covered goods with a most-favored nation (MFN) tariff of 15% or higher.
• For covered goods with an MFN rate lower than 15% percent, a combined rate of 15% will be applied.

Aerospace products

The agreement includes provisions for manned civil aircraft and aircraft parts, eliminating certain tariffs imposed on Japanese products under the World Trade Organization Agreement on Trade in Civil Aircraft. This change is expected to facilitate greater trade in aerospace products and enhance cooperation.

Agricultural market access

Japan will provide significant market access for US agricultural products, including:

• A 75% increase in US rice procurements within the Minimum Access rice scheme
• Purchases of US agricultural goods totaling US$8b per year, including corn, soybeans, fertilizer and bioethanol

Investment commitments

Japan has committed to investing US$550b in the US, which is expected to generate jobs and expand domestic manufacturing capabilities. A Fact Sheet that the White House released in July 2025 characterized this investment as reflecting Japan's strong commitment to the transatlantic partnership and recognition of the US as a secure destination for foreign investment.

Monitoring and compliance

The US Secretary of Commerce, in consultation with other relevant officials, will monitor Japan's implementation of its commitments under the agreement. Should Japan fail to meet its obligations, the US may modify the order to address any resulting national security concerns.

Actions for businesses to consider

Affected companies should consider the following actions:

• Review the implications of the US-Japan Agreement to align import approaches and compliance obligations.
• Consult with legal and trade advisors to navigate the complexities of the new tariff structure and help ensure compliance with the Agreement.
• Review contracts with suppliers and customers to clarify contractual liability for duties and taxes.
• Consider renegotiating supplier and customer pricing agreements and/or cost-splitting arrangements.