Trump Says US Clinched ‘Largest’ Trade Deal With Japan — Nikkei Soars, Analyst Calls It A Win For Ishiba

Trade deal headlines continued to trickle in Tuesday night as President Donald Trump announced that the U.S. had finalized a "massive deal" with Japan, just ahead of his previously set Aug. 1 tariff deadline.

Posting on social media, Trump called it the "largest" trade deal ever with the Group-7 ally, noting that Japan will pay a 15% reciprocal tax to the U.S. — a significant reduction from the 25% tariff he had threatened in a letter to Japanese Prime Minister Shigeru Ishiba earlier this month.

That 25% figure was itself an escalation from the original April rate under Trump's "Liberation Day" tariffs, which had been suspended to allow time for negotiations.

Japanese markets rallied in response, with the Nikkei 225 jumping more than 2.5% in early trading, while U.S. stock futures were mixed.

The SPDR S&P 500 ETF (SPY), an exchange-traded fund that tracks the S&P 500 — a measure of broader U.S. market performance — has gained nearly 8% this year. The iShares MSCI Japan ETF (EWJ) is up over 9.5%.

“I just signed the largest TRADE DEAL in history with Japan. We worked on it long and hard—It’s a great deal for everybody,” Trump posted on Truth Social, adding that Japan would invest, at his direction, $550 billion in the U.S.

Japan will receive 90% of the profits from the investment, he added. Trump said the deal will create hundreds of thousands of jobs. More importantly, Japan will open its market to U.S. trade, including cars and trucks, rice, and certain other agricultural products.”

“This is a very exciting time for the United States of America, and especially for the fact that we will continue to always have a great relationship with the Country of Japan,” Trump said in his post.

The trade deal was reached after months of negotiations between the two countries, with the primary areas of disagreement being the liberalization of trade in automobiles and agricultural products.

Japan is an export-oriented nation, with the bulk of its GDP derived from trade.

The deal comes close on the heels of an electoral debacle for the ruling Liberal Democratic Party (LDP), resulting in the loss of a majority in the upper house. Despite his fate hanging in the balance, Shigeru said he would stay on to complete the deal.

After the initial suspension of the tariffs, the U.K. became the only country to clinch a deal with the U.S. Following the extended Aug. 1 deal deadline, the U.S. announced a bilateral agreement with Indonesia, limiting the reciprocal tariffs to 19%.

The Japan trade deal came as a surprise to analysts and watchers. Andrew Jackson, head of Japan equity strategy at Ortus Advisors in Singapore, said, “This is definitely a big positive for Ishiba and the Liberal Democratic Party, right when they need it most,” according to Bloomberg. 

He called the 15% rate a better outcome than the 20% that was priced in. 

Sean Callow, senior FX analyst at InTouch Capital Markets in Sydney, reportedly said the claimed $550 billion foreign direct investment (FDI) sounded like a “phantom number,” adding that the dollar-yen pair will likely retain its usual positive correlation with Japanese equities and edge higher for now.

The news of the trade deal also sent Japanese auto stocks higher, with Toyota Motor soaring over 11%, Honda Motor jumping nearly 9% and Nissan Motor advancing more than 8.5% in Tokyo trading.

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