WASHINGTON (AP) — President Donald Trump unveiled a new trade framework with Japan on Tuesday, introducing a 15% tax on goods imported from the Asian nation. This marks a significant shift from the previously proposed 25% tariff.

“This Deal will create Hundreds of Thousands of Jobs — There has never been anything like it,” Trump declared on his platform, Truth Social. He emphasized that the United States “will continue to always have a great relationship with the Country of Japan.”

In a notable aspect of the agreement, Japan is expected to invest approximately $550 billion into the U.S. at Trump’s direction, while also agreeing to open its market to American autos and rice. Early Wednesday, Japanese Prime Minister Shigeru Ishiba acknowledged the agreement, expressing hope that it would benefit both nations and promote collaboration.

The announcement comes as Trump aims to demonstrate his prowess as a dealmaker, despite initial market fears stemming from the tariff proposals made earlier this year. The exact impact of the tariffs on Japanese automobiles remains unclear, particularly whether they will still incur a 25% tariff as previously suggested.

Tariff Implications and Market Reactions

The current tariff framework is part of Trump’s broader strategy, portraying these trade measures as beneficial for the U.S. economy. His administration claims that revenues generated from these tariffs will help diminish the budget deficit, encouraging factories to relocate to America to bypass the import taxes and rectify trade imbalances.

However, the continuation of tariffs raises concerns about potential price increases for consumers and businesses, as companies may pass costs down the line. This issue was underscored on Tuesday when General Motors reported a 35% decline in net income for the second quarter, citing tariffs as a looming threat to its business, leading to a notable drop in stock share prices.

Expanding Trade Measures

In conjunction with the announcement regarding Japan, Trump also disclosed a trade framework with the Philippines, introducing a higher 19% tariff on imports from the country while exempting American-made products from import taxes. Similarly, he reaffirmed a 19% tariff on goods from Indonesia.

The U.S. recorded a substantial trade deficit of $69.4 billion with Japan last year, according to data from the Census Bureau. This trade imbalance is part of a wider pattern, with the U.S. also having a $17.9 billion deficit with Indonesia and a $4.9 billion deficit with the Philippines.

Upcoming Trade Discussions

As the August 1 deadline for tariff implementation draws near, Trump is set to engage in discussions with representatives from the European Union, with talks scheduled for Wednesday. In a dinner event, the president mentioned, “We have Europe coming in tomorrow, the next day.” Earlier this month, Trump threatened the 27 EU member states with potential 30% tariffs if no agreement is reached.

Additionally, the Trump administration is in negotiations with China, which is anticipated to continue through August 12, as goods from the nation are currently subjected to a 30% baseline tax.

Treasury Secretary Scott Bessent will meet with Chinese officials in Stockholm next week, with aspirations of transitioning the U.S. economy away from consumption and fostering increased consumer spending in the manufacturing-oriented Chinese economy. Bessent commented, “President Trump is remaking the U.S. into a manufacturing economy,” suggesting a mutually beneficial approach for both nations.