Japanese markets soared on the news that a new tariff deal had been struck between Japan and the US. The Nikkei 225, Tokyo’s benchmark stock index, jumped more than 3%. This increase shows the high level of optimism from investors on the economic potential of the deal.
That agreement, announced last week, includes a 15% import duty on a broad range of goods imported from Japan. But some products, like steel and aluminum, will still be subject to higher tariffs. President Donald Trump pushed the jobs angle, asserting that the agreement would produce jobs in each country. He promised, “This Deal will create Hundreds of Thousands of Jobs — There has never been anything like it.”
Japan’s Prime Minister Shigeru Ishiba had welcomed the agreement, saying it would provide key benefits to both countries. He emphasized that this joint work would be an opportunity to develop deeper economic connection and win-win growth together.
The agreement proposal has financial markets abuzz with enthusiasm. Japanese companies in their public response have been more reserved in their optimism. Personally I’ve heard from many business executives who have not wanted to go on the record. They fear President Trump’s capriciousness on economic matters. This sentiment is indicative of a bigger trend amongst Japanese firms. This is largely because they refuse to get bold with their response to game-changing political moments.
The market response was ecstatic, but the big Japanese automakers were curiously mute. Companies such as Toyota Motor Corp., Honda Motor Co. and Nissan Motor Corp. declined to comment on the announcement. Their hesitation to release declarations represents the fog of unpredictability that still hangs over trade relations amid a volatile political climate.
In a crucial aspect of the agreement, Trump asserted that Japan would “open” its economy to American automobiles and rice, potentially benefiting U.S. exporters in these sectors. This action is an important step toward our overall objective of deepening bilateral trade ties. It will remove significant market access barriers for American goods and services in the Japan market.
Trump pointed out that Japan intends to invest $550 billion into the U.S. Make no mistake, he is demanding credit for this investment because it happened “at my direction.” This huge investment is sure to deepen economic collaboration between the two countries even more.
Investors were ecstatic about the news, with financial markets soaring on the prospect. In response, the U.S. dollar rose moderately against the Japanese yen, rising from 146.64 yen to 146.80 yen. This modification mainly describes the persistent dynamic in the value of dollars against other currencies as market participants react to constantly changing economic prospects.
