US President Donald Trump signed an executive order on Thursday, September 4, 2025, that cuts tariffs on Japanese car imports from 27.5 per cent to 15 per cent, easing uncertainty for motor industry giants like Toyota, Honda and Nissan.

It formalises an agreement, which was announced in July, to apply a 15 per cent levy to almost all Japanese exports to the US – including vehicles and pharmaceuticals.

Tokyo has also agreed to invest Ksh79.75 trillion, Ksh69.7 trillion in US projects, and gradually open its economy to American goods, including cars and rice, the White House said.

The deal came after a month of negotiation between the US and Japan in the wake of Trump announcing sweeping tariffs on most countries around the world in April 2025.

“Finally,” Japan’s top trade negotiator, Ryosei Akazawa, in Japanese, as he reposted a White House announcement about the executive order.

According to the order, the deal will help reduce America’s trade deficit with Japan and provide US businesses “breakthrough openings”.

The White House said Japan has committed to buying Ksh 1.16 trillion worth of US goods a year – including agricultural products, fertilisers and bioethanol.

It added that Tokyo has also agreed to gradually increase its purchases of US-grown rice by 75 per cent- a concession it had previously resisted to protect its agricultural industry.

Trump hailed the agreement as “massive” when it was announced in July 2025.

“It’s a great deal for everybody. I always say it has to be great for everybody. It’s a great deal,” he said in a news conference.

The Japanese economy is reliant on selling goods abroad, with the US as its biggest export market.

Cars account for around 20 per cent of the country’s total exports.

Trump’s tariffs, which came into effect in August 2025, have sent shockwaves around the world as governments and businesses adapt to the changing global market.

In August, Toyota warned that the impact of US tariffs would cost it around Ksh1.5 trillion by 2025.

Shares in Japanese carmakers and parts suppliers rose on Friday, September 5, 2025, in Tokyo after the executive order was signed.