On September 5, 2025, President Trump issued an Executive Order titled “Implementing the United States-Japan Agreement” (the “EO”). The EO implements the terms of a U.S.–Japan trade agreement announced by the White House in July of 2025.
The EO clarifies U.S. tariff treatment of Japanese goods imported into the United States, including a baseline 15% tariff on most goods of Japan, with special treatment for certain aerospace and automotive goods. The EO also describes economic commitments by Japan, including $550 billion in investments in the United States and the purchase of U.S. civil aviation and defense goods, as well as efforts to facilitate the sale in Japan of U.S. agricultural goods and passenger vehicles.
U.S. Tariffs on Goods of Japan
The EO sets a 15% baseline tariff on most Japanese goods. It raises to 15% tariffs on goods previously subject to lower tariffs, while leaving in place existing tariffs on goods that are already subject to rates at or above 15%. This new tariff scheme applies retroactively to goods of Japan entered for consumption or withdrawn from a warehouse for consumption on or after 12:01 EDT on August 7, 2025.
The EO describes special treatment for certain aerospace goods, automobiles, and automobile parts.
Other than unmanned aircraft, Japanese goods covered by the World Trade Organization Agreement on Trade in Civil Aircraft are no longer subject to reciprocal tariffs or to industry-specific tariffs relating to aluminum, steel, or copper.
Japanese automobiles and automobile parts were previously generally subject to 25% industry-specific tariffs. These tariffs now apply only insofar as needed to bring the applicable tariff rate up to 15%. They do not apply when these goods are already subject to tariff rates at or above 15%.
The EO authorizes the Secretary of Commerce to lower to 0% the reciprocal tariff rate on certain goods. These goods include products of Japan that are “natural resources unavailable (or unavailable at sufficient scale to satisfy domestic demand)” in the United States, generic pharmaceuticals, generic pharmaceutical ingredients, and generic pharmaceutical chemical precursors. The EO (and other public information from the Trump Administration) does not further clarify these categories, and so far, this authority has not been used.
Commitments by Japan
The EO describes several economic commitments by Japan as part of the bilateral agreement. According to the EO, Japan has agreed to invest $550 billion in the United States, with the investments to be selected by the United States Government. While the EO provides limited details on this pledge, according to media sources, the United States and Japan signed a memorandum of understanding (“MOU”) on September 4, 2025 that outlines an investment framework. Under this non-legally binding MOU, a U.S. investment committee will propose projects to President Trump after consulting with a separate committee comprised of representatives from both the United States and Japan. Profit-sharing arrangements are made for projects in which Japan invests, and where Japan declines to fund a project, the United States may respond by imposing tariffs on Japanese imports. Japan must allocate the $550 billion by January 19, 2029 – before the end of President Trump’s term.
The EO also states that Japan will purchase an unspecified number of U.S.-made commercial aircrafts and U.S. defense equipment. Furthermore, the Government of Japan is “working toward” an expedited implementation of measures to facilitate Japan’s purchase of U.S. agricultural goods and other U.S. products, as well as “working to accept” sales of U.S. manufactured and U.S. safety-certified passenger vehicles in Japan without additional testing. It is currently unclear if these efforts will succeed (and how this might impact the U.S.–Japan agreement) or how they will be implemented in Japan.
Traditional bilateral trade agreements include an official written agreement endorsed by both parties. The EO (and simultaneously-issued Fact Sheet) reflect the Trump Administration’s articulation of the U.S.–Japan agreement. An official, written version of this agreement is not publicly available, and it is not known whether or how Japan plans to implement the commitments as they are described in the EO.
Conclusion
The EO helpfully clarifies U.S. tariff treatment of Japanese goods but is not the final word on U.S.–Japan trade relations. Japan’s Economic Revitalization Minister, who was involved in negotiating the countries’ agreement and MOU, has reportedly stated that the agreement remains unsettled while Japan awaits most-favored-nation treatment for pharmaceuticals and semiconductors. Moreover, the EO itself leaves open the possibility of tariff relief on the natural resources and pharmaceutical goods described therein. How Japan’s investment commitments will play out also remains to be seen.
