Overview

• U.S. tariffs on Japanese automobiles and parts fall from 27.5% to 15%, with the reduction to begin seven days after the rule is published in the Federal Register and to apply retroactively to qualifying goods from Aug. 7.
• The executive order ends tariff “stacking” by setting a 15% total for items previously below that rate and imposing no added reciprocal duty where existing levies are at least 15%.
• Implementation authority includes the option for the Commerce Secretary to reduce reciprocal rates to zero for certain categories such as natural resources not available in the U.S. and generic pharmaceuticals and their inputs.
• Japan pledges expanded market access and purchases—including a 75% increase in rice procurements and roughly $8 billion a year in U.S. farm goods—and a stated investment package of up to $550 billion in U.S. projects, with funding mechanisms still being worked out.
• Japanese equities, especially automakers, rose after the cap was formalized, and U.S. and Japanese officials signed memorandums of understanding to advance the agreement’s rollout.