Japan Trade Deal Could Be Blueprint for Other Countries Seeking Lower Tariff Rates

President Donald Trump and Commerce Secretary Howard Lutnick. (ANDREW CABALLERO-REYNOLDS/AFP via Getty Images)

Trade partners with the U.S. could lower tariff rates set to kick in next week by striking deals similar to the one made with Japan, President Donald Trump told reporters Thursday.

Speaking at the construction site for the Federal Reserve headquarters currently under renovation, he said that Japan effectively bought down its tariff rate by committing to invest $550 billion in U.S. industries, such as energy infrastructure, semiconductor manufacturing, and pharmaceutical production.

Asked if other countries could buy down their rates as well, Trump responded, “Ya, I would let them buy it down.”

As part of the Japan deal, which would lower rates on imports to the U.S. from the threatened 25% to 15%, effective Aug. 1, the Asian nation committed to the $550 billion investment, with the U.S. retaining 90% of all profits and Japan getting 10%. Neither country has provided additional specifics on the deal.

Trump also teased a potential deal with the European Union, which currently faces a 30% rate if no other agreement can be reached by Aug. 1. “We’re in the process of probably making a very good deal with them too. They want to make a deal very badly,” he said.

Trump Close to EU Trade Deal. Why 15% Is the Key Rate to Watch.

Hopes are running high that President Donald Trump will soon announce a trade deal with the European Union, which would give more clarity on where tariffs rates will finally settle.

The U.S. and EU are close to reaching an agreement on a 15% tariff rate as part of a similar deal to the one agreed with Japan earlier this week, The Wall Street Journal reported Wednesday.

An announcement would reduce a lot of uncertainty for investors and companies that would like to know what their longer-term costs will be. As the Aug. 1 deadline for deals approaches, it looks like most countries will face rates of around 15%.

Treasury Secretary Scott Bessent said Wednesday that the Trump administration had been making “good progress” in the talks with the EU.

“This would mark only a marginal increase compared to the 10% additional tariffs that EU exports to the U.S. have faced since Liberation Day, but with certainty about the future,” Deutsche Bank macro strategist Jim Reid said in a research note.

“Optimism was clear on several fronts yesterday, and aside from the press reports, the noises from the negotiators were sounding much more positive.”

While the U.S. appears to be nearing a deal with the EU, there has been little sign of any progress in its talks with another trading partner, Canada. Prime Minister Mark Carney signaled to reporters that tariffs could stay even if Toronto and Washington are able to reach an agreement.

Ford and General Motors are two stocks that could suffer if negotiations stall. Trump’s levies have loomed over the autos sector for months because toughly half the cars sold in the U.S. are imported, mainly from Mexico, Canada, Japan, and South Korea.

Write to Anita Hamilton at anita.hamilton@barrons.com, Brian Swint at brian.swint@barrons.com and George Glover at george.glover@dowjones.com