Trump signs order to lower US tariffs on Japan autos to 15%

WASHINGTON: US President Donald Trump signed an order on Thursday (Sep 4) to implement lower tariffs on Japanese automobile imports and other products that were announced in July.

The lower tariffs on autos are set to take effect seven days after publication of the order. Some of the tariff relief is retroactive to Aug 7.

Trump's order also means a reduced US tariff rate on Japanese cars, from the current 27.5 per cent to 15 per cent, is set to take effect by the end of this month, Reuters reported earlier, citing a Japanese government source.

Trump's levies on global shipments, which kicked in August, have hit Japanese carmakers hard.

Last month, Toyota said it expected a hit of nearly US$10 billion from Trump's tariffs on cars imported into the United States.

Trump's order says Japan is "working toward an expedited implementation of a 75 per cent increase of United States rice procurements ... and purchases of United States agricultural goods, including corn, soybeans, fertiliser, bioethanol (including for sustainable aviation fuel)" and other US products totalling US$8 billion per year.

It also reiterates that the Japanese government has agreed to invest US$550 billion in the United States in projects that will be selected by the US government.

The Japanese government declined to comment.

The United States in July agreed to lower tariffs on imports of Japanese automobiles, but the timing remains unclear as Trump had yet to sign an executive order.

Japan's top trade negotiator Ryosei Akazawa flew to Washington on Thursday to press the United States over issuing the executive order.

Japan has said the trade deal ensures the US's fifth-largest trading partner will always receive the lowest tariff rate on chips and pharmaceuticals of all the pacts negotiated by Washington. It also includes no tariffs on commercial airplanes and parts.

The executive order is also expected to include provisions that the 15 per cent levy agreed in July would not be stacked on Japanese imports that are subject to higher tariffs, while items previously subject to less than 15 per cent tariffs would be adjusted to 15 per cent, the source said.

The investment package, which will come in the form of equity, loans and guarantees from Japan's government-owned banks, was agreed as part of the July trade deal.

"The talks are now in their final phase," the source said. "Once Minister Akazawa arrives in Washington, the aim is to have the executive order issued swiftly. We will then move on to formulating plans to execute investment projects," he said.

The European Union secured a 15 per cent baseline tariff as part of a framework trade deal with the US in July, averting looming new tariffs on chips and pharmaceuticals.

Last week, the European Commission proposed removing duties on imported US industrial goods in return for reduced US tariffs on European cars, a key part of the trade agreement between the EU and the United States.