President Trump took to social media to announce that the U.S. has signed a trade agreement with Japan. The new deal means that the tariffs on Japanese imports will now be 15%, not 25% as the President had warned previously.
What has been announced?
Earlier this month, we reported that President Trump had sent a letter to the Prime Minister of Japan. The letter stated that, from August 1, 2025, Japanese goods coming into the U.S. would face a tariff of 25%. However, the President has now announced that a trade deal has been agreed with Japan. As a result, the threatened 25% tariff has been cut to 15%.
President Trump announced the trade deal on his social media platform, Truth Social. The post said, “We have just completed a massive Deal with Japan, perhaps the largest Deal ever made. Japan will invest, at my direction, $550 Billion Dollars into the United States, which will receive 90% of the Profits. This Deal will create Hundreds of Thousands of Jobs – There has never been anything like it.”
What does this mean?
Companies including Fujifilm, Sigma, Canon, and ASUS have already raised prices in the United States due to President Trump’s tariffs. If the 25% tariff had been introduced, prices in the U.S would have risen even further. As a lot of camera equipment is made by Japanese companies, that market would have been particularly affected. Hopefully, any price increases will be limited now. However, the new 15% tariff rate is still an increase on the current 10% tariff on Japanese imports to the U.S.
Who pays the tariffs?
President Trump’s Truth Social post said, “Japan will pay Reciprocal Tariffs to the United States of 15%.” However, this isn’t correct. The importer in the U.S. has to pay the fee due for a tariff in addition to the cost of the goods. As a result, the goods become more expensive at the retail level because the importer needs to recoup the cost of the tariff. This means that the tariff on Japanese imports is paid by consumers in the U.S., not by Japan.
The tariff paid by U.S. consumers goes directly to the US government. In addition, the tariffs only apply in the U.S., so the rest of the world hasn’t suffered any of these price increases.
What we think
The 15% tariff rate that U.S. consumers will now pay on Japanese imports is better than the 25% that was due to come into force. However, it is still an increase on the 10% tariff that is in place today. As such, it remains to be seen whether Japanese manufacturers will reduce their wholesale prices accordingly. If they don’t, then retail prices for Japanese goods will rise even further in the U.S., even with the President’s new deal.
President Trump is promising that his tariffs will create lots of jobs in the long term. Unfortunately, in the short term at least, this means U.S. consumers are picking up the bill for his policies.
