Summary
Creates new rules for trade with Japan, including a 15% tax on most goods coming into the U.S. and more U.S. exports to Japan.
What problem does this solve?
The United States has a large trade imbalance with Japan, which is viewed as a threat to the country's economy and national security. This order creates a new trade agreement with Japan to lower the trade deficit, increase American exports, and encourage investment in the U.S.
Who does this affect?
- U.S. importers and exporters
- American consumers
- Japanese manufacturers
What does this order do?
Establishes a 15 percent baseline tariff
Applies a 15% tax on almost all goods imported from Japan. If a product's current tax is less than 15%, it will be raised to 15%. If it is already 15% or higher, it will not change.
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Secures a $550 billion investment from Japan
The government of Japan has agreed to invest $550 billion in the United States. The U.S. government will select the investments to create jobs and expand American manufacturing.
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Increases U.S. exports to Japan
Japan will buy more American goods, including $8 billion per year in farm products like corn and soybeans, as well as commercial aircraft and defense equipment.
Removes tariffs on aerospace products
Eliminates previously set taxes on civil aircraft products, except for drones, that are imported from Japan.
Sets new tariffs for cars and car parts
Changes the existing taxes on automobiles and auto parts from Japan to a new baseline rate of 15%.
Exempts certain products from new tariffs
Allows the Secretary of Commerce to remove the new tariffs for certain products, including generic drugs, some natural resources, and chemical ingredients for medicine.
Applies new tariffs retroactively
The new 15% general tariffs apply to all Japanese products that entered the U.S. on or after August 7, 2025.
Monitors Japan's compliance
The Secretary of Commerce will watch to make sure Japan follows through on its promises. The President may change the order if Japan fails to meet its commitments.
What is the real world impact?
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Raises costs for consumers and businesses
Imposing a baseline 15% tariff on most Japanese goods, including cars and electronics, could lead to higher prices for American consumers and increased costs for businesses that rely on Japanese parts.
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Uses national security to justify economic policy
The order repeatedly cites national security as the reason for the new tariffs. Critics might argue this is a way to enact protectionist trade policies that would otherwise be difficult to justify.
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Secures a large foreign investment in the U.S.
A key part of the agreement is a $550 billion investment from Japan into the United States. This aims to create American jobs and strengthen domestic manufacturing, giving the U.S. government influence over where the money is spent.
When does this start?
This order has several different start dates for its various rules, with some taking effect retroactively.
General tariffs on Japanese goods
The new 15% baseline tariffs are effective as of 12:01 a.m. on August 7, 2025, before the order was signed.
Aerospace and automobile tariff changes
The new rules for aerospace products, cars, and car parts take effect after a notice is published in the Federal Register, which must happen within 7 days of this order's publication.