US President Donald Trump signed a decree to reduce import duties on Japanese cars and other goods. The decision should come as a relief to Japan’s export-oriented economy. This reports Reuters agency.
The formalization of the deal between the US and its key Asian ally eases uncertainty that has lingered since July and confirms agreements on Japan’s investment of $550 billion in projects in the United States. The new tariffs for Japanese cars will be 15% instead of the previous 27.5% and will come into effect seven days after the official publication of the document.
The decree clarifies that the 15% tariff agreed in July will not be added to the higher rates on certain goods, such as beef. Goods with duties below 15% will be raised to this level. The relaxation will take effect retroactively from August 7.
Also, duties will not apply to commercial aircraft and components. Trump’s earlier tariffs on global supplies have hit Japanese exporters hard, especially in the automotive industry. Last month, Toyota said it expects to lose about $10 billion due to these restrictions.
South Korea, Japan’s main competitor in auto exports, is still awaiting a similar decision by Trump to lower tariffs on Hyundai and Kia. Seoul is analyzing the implications of this move for Japanese manufacturers. On the stock markets on September 5, shares of Japanese car companies rose, while South Korean ones fell slightly.
Toyota thanked Trump, saying:
“Despite the fact that almost 80% of our cars in the US are made in North America, this agreement provides the necessary certainty”.
As part of the agreement, Japan agreed to increase purchases of American rice by 75% and to import $8 billion more corn, soybeans, fertilizers, bioethanol and other agricultural products annually. In addition, Tokyo pledged to purchase 100 Boeing aircraft and increase annual defense spending on American companies from $14 billion to $17 billion, the White House said.
