HONG KONG: Tokyo stocks rallied with the yen Wednesday (Jul 23) after Japan and the United States finally hammered out a trade deal to slash Donald Trump’s tariffs, including those on the crucial car sector.
Investors were also cheered by news that Washington had reached agreements with Indonesia and the Philippines, stoking optimism that other countries will achieve deals to avoid the worst of the US president’s levies.
Despite a lack of deals being made leading up to Trump’s self-imposed Aug 1 cut-off date, equity markets have been on the march in recent weeks on optimism that governments will eventually get over the line.
Japan had been one of those yet to sign, despite a string of trips to Washington by trade envoy Ryosei Akazawa, dampening investor sentiment in Tokyo.
But Trump said Tuesday that officials had agreed to a “massive” deal that would include a 15 per cent tariff on imports from Japan, down from the previously threatened 25 per cent.
The pact also saw the 25 per cent levy on autos – a major export to the United States – slashed to 15 per cent.
“We just completed a massive Deal with Japan, perhaps the largest Deal ever made,” Trump announced on his Truth Social platform.
“Japan will invest, at my direction, $550 Billion Dollars into the United States, which will receive 90 per cent of the Profits.”
He did not provide further details on the investment plan, but claimed the deal “will create Hundreds of Thousands of Jobs”.
Japanese Prime Minister Shigeru Ishiba said that he needed to examine the deal before commenting.
Akazawa wrote on X: “Mission accomplished.”
Traders poured back into the market, pushing the Nikkei up more than 3 per cent thanks to soaring automakers.
Tokyo and Mitsubishi rocketed around 12 per cent and Nissan jumped more than 9 per cent.
The yen strengthened to 146.20 per dollar – compared with close to 148 on Tuesday. The unit had already enjoyed a recent tick-up after Ishiba vowed to remain in office despite a devastating weekend election loss.
Trump also hailed an agreement with Manila that will see the toll on Philippine goods lowered by one percentage point to 19 per cent, while tariffs on Indonesia were slashed from 32 per cent to 19 per cent.
Shares in Manila and Jakarta rose.
Source: CNA
