Donald Trump said the US had agreed a "massive" trade deal with Japan, confirmed by his counterpart Prime Minister Ishiba, sending stocks in Tokyo soaring.
The US President said in a social media post that Japan will receive a 15% reciprocal tariff and invest $550 billion in the US "at my direction".
Ishiba confirmed that Japan will face 15% tariffs, including on automobiles, and will not be disadvantaged from any tariffs on microchips, though the 50% tariff on steel and aluminium will remain for the time being.
In Tokyo, shares in carmakers led the way, as exports to the US will see no volume restrictions, in contrast to the UK’s trade arrangement.
Mazda Motor and Subaru soared over 17%, with Toyota, Mitsubishi and Honda all up in double digits, followed by factory robotics specialists Fanuc and Yaskawa Electric.
Regarding the politically sensitive matter of rice and other agricultural products, the Japanese PM stated that, while the country will increase US rice imports within the existing quota, it won’t compromise the domestic agricultural market.
Ishiba denied that Japan agreed to lowering import tariffs, which he claimed were not included in the agreement.
"Although the specifics remain unclear, both parties called the pact deal a success," said Min Joo Kang, economist at ING.
"Trump appears to view it as a massive deal, while Ishiba characterised it in less grandiose terms. Ishiba pointed out that among countries with a trade surplus with the United States, Japan negotiated the lowest tariff rate."
The agreed $550 billion investment into the US will be backed by loans from government-related organisations and, said Kang, is expected to include projects such as LNG projects in Alaska, and boost imports of US goods, including agricultural products.
"But, the implementation of a 15% tax on cars without a limit is a surprise. Ongoing uncertainty regarding Japanese politics -- including reports Ishiba will step down soon -- and the exclusion of defence spending from the agreement may introduce complexities to the negotiation process."