TradeDeal

Japan is taking another step to strengthen its economic alliance with the United States. The Ministry of Finance has announced the creation of a new investment facility within its state-owned development bank to support a massive trade package worth $550 billion.

Financing and Expansion Support
The package will be funded through equity, loans, and guarantees provided by the Japan Bank for International Cooperation (JBIC) and the Nippon Export and Investment Insurance (NEXI). The new facility within JBIC will help Japanese companies expand abroad, particularly in sectors critical to the country’s economic security.
To make this possible, the ministry revised regulations governing JBIC, allowing broader investment activities in developed countries, including the automotive and pharmaceutical industries.

Agreement Between Tokyo and Washington
Japan and the U.S. signed a memorandum of understanding earlier this month outlining the details of the partnership. Both nations agreed to focus on strategic sectors such as semiconductor production, energy, metals, pharmaceuticals, and shipbuilding. The deal is set to last until January 2029, coinciding with the end of Donald Trump’s presidential term.
According to U.S. Commerce Secretary Howard Lutnick, returns from the projects will first go toward recovering the initial investment. Profits will then be distributed, with the U.S. receiving 90% and Japan the remaining 10%.

Building U.S. Infrastructure
The U.S. will also establish an investment committee chaired by Lutnick to select projects funded through Japanese capital. Washington has already indicated that the funds will be directed toward strengthening domestic manufacturing — from nuclear plants and pipelines to semiconductor factories and quantum computing technologies.
Both nations also agreed to construct a liquefied natural gas pipeline in Alaska. Additionally, Japan committed to purchasing $8 billion worth of agricultural products as well as long-term imports of LNG and biofuels.

A Historic Deal
White House spokesperson Kush Desai described the agreement as the largest investment deal ever signed, calling it a cornerstone for ushering in “a new golden age of America.” At the same time, Washington pledged to lower tariffs on Japanese products from 25% to 15%, giving Tokyo greater access to U.S. markets.
The deal represents not only an economic partnership but also a geopolitical signal: the U.S. and Japan are tightening their alliance at a time when global markets face intensifying competition and mounting tensions across Asia and beyond.

#Japan , #usa , #TradeDeal , #GlobalMarkets , #economy

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European Brands Save Hundreds of Millions of Euros Monthly
European automakers have received major relief starting August 1. Under a new trade agreement with the U.S., import duties on their vehicles were cut from 27.5% to 15%, saving them an estimated €500–600 million ($540–650 million) per month.
EU’s chief negotiator Maroš Šefčovič confirmed that tariffs were lowered after the Trump administration published new rules in the Federal Register, instructing customs officials on the revised rates. The European Commission hailed the move as a crucial lifeline for automakers long pressured by high U.S. import barriers.
“Lower tariffs provide much-needed relief for the European auto industry and are one of the main benefits of this deal,” said Commission President Ursula von der Leyen.
Since the agreement is retroactive to August 1, carmakers are even entitled to refunds of excess duties already paid. According to Šefčovič, these monthly reimbursements will amount to roughly €500–600 million.
Despite the reduction, the new 15% rate remains well above the pre-Trump era, when tariffs were typically in the single digits. Trade groups and several Members of the European Parliament have criticized the deal as insufficient. Šefčovič, however, defended it as “the best possible compromise,” noting that Trump had threatened even higher tariffs during negotiations.

Japanese Carmakers: Heavy Losses and Uncertain Future
While Europe is reaping the benefits of the new arrangement, Japanese automakers continue to struggle under the weight of Trump’s tariff policies. In April, the president imposed an additional 25% duty on cars and auto parts, a move that industry leaders say hit far harder than expected.
For the period April through June 2025, Japan’s auto sector lost about ¥2.6 trillion ($17 billion) in operating profit.
🔹 Nissan and Mazda both reported net losses, with Mazda particularly vulnerable due to its reliance on exports to the U.S.

🔹 Mitsubishi Motors lost the bulk of its revenues, while Honda saw profits drop by 50%.

🔹 Toyota and Subaru posted declines in profits of over 30% year-over-year.
Executives describe the situation as a “new normal,” warning that high tariffs could remain in place even beyond Trump’s presidency. Raising U.S. prices is not a viable solution, as consumers are unwilling to shoulder such steep costs.
To soften the blow, companies tried multiple strategies: reducing prices of cars shipped from Japan, absorbing losses through U.S. subsidiaries, and subsidizing suppliers of auto parts. Still, the financial damage remains severe.

Partial Relief, But No Final Solution
In September, Trump signed another order lowering tariffs on Japanese cars from 25% to 15%, in exchange for large-scale Japanese investments in the U.S. Yet even at this reduced rate, the burden on Japanese manufacturers remains heavy.
While Europe now enjoys hundreds of millions of euros in monthly savings, Japan’s carmakers are still grappling with the harsh financial weight of protectionist trade policies. And though the new agreement offers somewhat more stable conditions, concerns about long-term competitiveness and sustainability remain strong.

#TradeDeal , #TRUMP , #Tariffs , #globaleconomy , #worldnews

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