The new U.S.-Japan trade deal lowers tariffs and strengthens economic ties, helping challenge China's regional aggression and instability.

Japan’s central bank policymakers are expected to keep rates on hold this week, despite the trade deal with the U.S. relieving some uncertainty over tariffs and strengthening the case for tighter policy.

After months of fraught negotiations with the United States, Japan clinched a deal just days before punitive tariffs were scheduled to take effect.

The U.S. is significantly reliant on the Taiwanese company for advanced chip manufacturing, raising concerns due to its proximity to China.

View PDF After more than three months of formal negotiations and many more months of speculation about the Trump administration’s trade and economic policy toward Japan, Washington and Tokyo have agreed to a trade deal.

The deal imposes 15% tariffs on Japanese cars and other goods, one of the more favorable rates. While the start date and other basic elements are still unknown, Treasury Secretary Scott Bessent warned this week that the US would monitor implementation and bump the rate up to 25% if Trump isn’t satisfied.

Japan's government said on Friday that profits from a $550 billion investment package agreed in this week's tariff deal with the U.S. would be split between Japan and the U.S. according to the degree of contributions by each side.