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Shares of Japanese automakers surged on Wednesday following an announcement from former U.S. President Donald Trump regarding a new trade agreement with Japan. Toyota (NYSE:TM) soared 11%, while Honda (NYSE:HMC) climbed 9%, driven by investor optimism over the reduced auto tariff terms included in the deal.
Trump revealed on his Truth Social platform that the agreement encompasses $550 billion in Japanese investments into the U.S. economy. While he did not directly reference the automotive industry, Japanese broadcaster NHK reported that the deal includes a 15% tariff on automobiles—down from a previously proposed 25% rate.
The tariff reduction is seen as a major relief for Japanese carmakers, who have faced ongoing trade pressure under heightened tariff threats. Investors welcomed the news, anticipating that a more favorable trade environment would benefit vehicle exports and ease cost burdens for manufacturers.
The positive sentiment comes amid a backdrop of escalating trade tensions, with the White House previously threatening significant tariffs on goods from both Japan and South Korea. A file photo from July 2025 showed rows of new Honda vehicles lined up at the Port of Richmond, underscoring the importance of Japanese automakers’ export operations to the U.S. market.
Market analysts say the announcement marks a potential turning point in U.S.-Japan trade relations, signaling renewed cooperation and economic alignment. The sharp rally in Toyota and Honda shares reflects growing investor confidence that the revised trade framework will enhance profitability for Japan’s auto sector, particularly in the competitive U.S. market.
As trade negotiations evolve, global investors are closely monitoring further developments that may impact automotive tariffs, foreign investment flows, and broader Japan-U.S. economic ties.
