Implementing the United States-Japan Agreement
This Executive Order implements a 2025 trade agreement between the United States and Japan. It establishes a new tariff framework that applies a baseline 15 percent ad valorem (percentage) tariff on most Japanese imports while creating special, sector‑specific rules for automobiles, aerospace products, generic pharmaceuticals, and certain natural resources. In exchange, Japan has committed to increased purchases of U.S. agricultural goods and vehicles, acceptance of some U.S. safety‑certified passenger vehicles without extra testing, purchases of U.S. commercial aircraft and defense equipment, and a pledge to invest $550 billion in U.S. projects that the U.S. government will select. The order is presented as a tool to reduce the U.S. trade deficit with Japan, strengthen the U.S. manufacturing and defense industrial base, and address national‑security concerns cited under existing trade statutes. The order directs the Departments of Commerce and Homeland Security (with Customs and Border Protection and other agencies) to modify the Harmonized Tariff Schedule of the United States (HTSUS) and to issue rules and notices to implement the tariff changes. It also authorizes zero‑tariff treatment for certain natural resources and generic pharmaceuticals if consistent with U.S. national interests, requires monitoring of Japan’s implementation, and permits the President to restore or change measures if Japan fails to meet its commitments.
Key Points
- 1Baseline 15% tariff on Japanese imports: For most goods from Japan with a lower current duty rate, the sum of the existing HTSUS (Harmonized Tariff Schedule) rate and the new additional rate will equal 15%. If a product already has a 15% (or higher) Column 1 duty, no extra tariff is added.
- 2Sector‑specific treatment:
- 3- Automobiles and parts: Section 232 automobile duties previously imposed on Japan are replaced by a framework that yields a 15% effective rate for products with lower existing duties and zero additional duty where Column 1 is already ≥15%.
- 4- Aerospace: Tariffs on civilian aircraft products covered by the WTO Agreement on Trade in Civil Aircraft (excluding unmanned aircraft) are removed as of the Federal Register notice implementing this section.
- 5- Generic pharmaceuticals and certain natural resources: The Secretary of Commerce may set reciprocal tariff rates to zero for products unavailable domestically at needed scale and for generic pharmaceuticals and ingredients, subject to U.S. national‑interest considerations.
- 6Japan’s market access and purchase commitments: Japan agreed to increase U.S. rice procurements under its Minimum Access scheme by 75%, to buy approximately $8 billion per year in specified U.S. agricultural products (corn, soybeans, fertilizer, bioethanol including for sustainable aviation fuel), accept certain U.S. passenger vehicles without additional testing, and purchase U.S. commercial aircraft and defense equipment.
- 7$550 billion investment pledge: Japan agreed to invest $550 billion in the United States; the U.S. government will select the investments. The order says these investments will create jobs, expand manufacturing, and bolster the defense industrial base.
- 8Implementation, monitoring, and enforcement: Commerce, in consultation with USTR, DHS/CBP, and the ITC, will modify the HTSUS and issue implementing rules. The Secretary of Commerce must monitor Japan’s compliance and report updates; the President may modify or reinstate measures if Japan fails to meet commitments. The order supersedes previous inconsistent proclamations to the extent of any conflict.