US-Japan Trade Agreement Introduces New Tariffs and Investment Commitments

The agreement was presented in a White House Fact Sheet as a strategic realignment of the US-Japan economic relationship, with significant implications for the automotive, energy, manufacturing, and agricultural sectors. However, various important details are still pending formal guidance on the agreement.

As outlined below, importers and other companies relying on Japanese imports should adopt a proactive approach to tracking entries, monitoring liquidation dates, and preserving rights to refunds or preferential treatment as the agreement is finalized.

As of this update, the agreement remains in a transitional and partially implemented phase.

• Formal Joint Statement and Official Japanese Government Version Pending: There has not been a released formal joint statement or official Japanese government version of the agreement. The White House has issued a Fact Sheet, but many operational details remain unconfirmed.
• Reciprocal Tariffs of 15% on Japanese Imports: Reciprocal tariffs of 15% were imposed by the United States as of early August, replacing the previously threatened 25% rate. However, there have been reports of implementation inconsistencies, particularly in relation to whether the Most Favored Nation rate (i.e., general rate of duty applied to Japanese products) is included within the 15% rate. The Japanese government has publicly stated that the United States admitted to its “extremely regrettable error” and pledged to fix these errors and refund excess duties, although this has not been publicly confirmed by US officials, and as of the date of this alert, no changes in the rate have been implemented.
• Automotive: The available details from the US government inform that the agreement will reduce US tariffs on Japanese automobiles and parts from 25% (Section 232) to 15%. Japan has agreed to lift regulatory restrictions on US vehicles, including recognition of US safety standards. However, the precise legal mechanism for these changes is pending, and US automakers have expressed concern about competitive impacts relative to other trading partners.
• Section 232 Tariffs of 50% on Steel, Aluminum, and Copper: 50% tariffs remain in place for the time being without reference to them in the official details released to date. The status of Section 232 tariffs on other sectors (e.g., semiconductors, pharmaceuticals) is not yet clarified.
• Japanese Investment Commitments: Commitments are not yet formalized in a binding legal instrument and are reported to include $550 billion in Japanese investments into the United States for the revitalization and expansion of strategic American sectors, including energy infrastructure and production, semiconductor manufacturing, critical minerals mining, processing and refining, pharmaceutical and medical production, and commercial and defense shipbuilding.
  • The specific terms of the Japanese investment fund remain unclear. President Trump asserted that the United States would retain 90% of the investment’s profits. Later, President Trump claimed that the $550 billion is money for him to invest as he sees fit. Meanwhile, Japanese officials are saying that the $550 billion will consist primarily of loans and guarantees backed by the Japanese Bank for International Cooperation and Nippon Export Credit and Investment Insurance.
  • US Department of the Treasury Secretary Scott Bessent stated on television that if the president is unhappy with the investment fund, tariff rates will “boomerang” back to 25%.
• Other Sectoral Implications:
  • Agriculture: Japan has committed to an immediate 75% increase in imports of US rice, to an expansion of import quotas, and purchase $8 billion in US goods, including corn, soybeans, fertilizer, bioethanol, and sustainable aviation fuel.
  • Energy: Expansion of US energy exports to Japan, including the potential negotiation of a new offtake agreement for Alaskan liquefied natural gas.
  • Manufacturing and Aerospace: Japan has agreed to purchase US-manufactured commercial aircraft, including 100 Boeing planes, and to increase annual purchases of US defense equipment.

Best Practices for Continuing to Monitor the Trade Deal

Given the evolving and partially implemented nature of the US-Japan trade agreement, US importers and other company stakeholders in the Japanese supply chain into the United States must be vigilant in preserving potential benefits and ensuring compliance, including the following.

Track Entry and Liquidation Dates

• Maintain detailed records of all entries of Japanese-origin goods, including entry summaries, tariff classifications, and duty payments.
• Monitor liquidation dates closely. If the final US-Japan trade agreement includes retroactive modifications or clarifications, timely protests or post-summary corrections may be necessary to secure refunds or adjustments.

Monitor Tariff Implementation and Refunds

• Staying alert for US Customs and Border Protection guidance regarding corrections to tariff rates and refund procedures for overpaid duties, especially in light of the Japanese government’s announcement that the United States will refund excess duties.
• Reviewing Cargo Systems Messaging Service messages and Federal Register notices for updates on implementation, special program indicators, and eligibility requirements.

Preserve Documentation for Preferential Treatment

• If and when preferential tariff treatment is formalized, ensuring that all origin documentation, certificates, and supporting records are retained and available for audit.
• For goods potentially eligible for future retroactive benefits, identifying the relevant entries and consulting with customs counsel regarding protest strategies.

Monitor Sector-Specific Developments

• For automotive, steel, aluminum, semiconductors, and other sensitive sectors, track both US and Japanese regulatory announcements for changes in tariff rates, quota allocations, and regulatory requirements.
• Engage with customs and trade counsel to stay informed about sector-specific negotiations and compliance obligations.

Engage in Ongoing Monitoring and Advocacy

• The US-Japan trade agreement is likely to evolve, with further negotiations anticipated on unresolved issues (e.g., Section 232 tariffs, investment terms, digital trade).
• Importers and stakeholders should remain engaged with legal counsel and government relations contacts to advocate for clear, timely, and equitable implementation.

For further information or assistance with compliance strategies, please contact the authors of this alert or your regular AFS attorney. Our team will continue to monitor developments and provide timely updates as new information becomes available.