On Tuesday, 22 July, US President Donald Trump announced the conclusion of a new bilateral trade agreement with Japan. The deal, which Trump has described as “the biggest deal ever made,” introduces a 15% tariff on Japanese exports – significantly lower than the previous 25% tariffs that were due to come into effect on 1 August. In return, Japan has agreed to a $550 billion investment in the US. On the EU side, negotiators believe that a final EU-US deal could mirror the US-Japan trade agreement.
President Trump shared the announcement on his Truth Social account, highlighting that Japan will open its market to US made “Cars and Trucks, Rice and certain other Agricultural products, and other things.” Trump has marked the agreement as a landmark achievement, stating: “We’re doing things that have never been done in this country before, and our country is becoming very rich again, and that’s the way it should be.”
While exact timelines and information on implementation have not been announced, officials on both sides have described the agreement as a critical step towards a more balanced and mutually beneficial partnership, with Japanese Trade Minister Ryosei Akazawa, sharing “mission accomplished.”
The EU’s reaction
For the EU, this US-Japan Trade Agreement may shape negotiations for a potential EU-US Trade Agreement. It can be anticipated that the EU will face similar pressure to invest more in the US in return for lower tariffs.
Moreover, the EU has revised its second list of proposed tariffs on US goods. The revised second list is now expected to be combined with the first list to create a €93 billion US trade retaliation package.
Notably, items expected to be removed from the list are laboratory reagents, semiconductor parts, and X-ray apparatus. In addition, following stakeholder consultations, several goods related to health care are expected to be removed, such as surgical materials, wheelchairs, and other medical devices.
In addition, EU Member States approved the enlarged package of countermeasures on Thursday, 24 July, with the retaliation package expected to enter into force on 7 August – this date is tentative and depends on what Trump announces on 1 August. The European Commission is expected to publish the list on Friday, 25 July, with some items on the list facing a tariff of up to 30%.
By dropping items from the list of retaliatory tariffs, it appears the Commission is responding to feedback from European industries and Member States concerned about potential supply chain disruptions. Irish officials have noted that nearly €1 billion of products that have been removed from the retaliatory list are products on which Ireland has a high trade dependency on the US, namely pharmaceutical and agricultural products.
