Japan Says U.S. Will Correct Error In Trump’s Tariff Order And Give Refunds

Topline

The Trump administration has agreed to revise a presidential order on tariffs against Japan to correct an “extremely regrettable” error and eliminate the stacking of multiple tariffs on Japanese goods, Japan’s top trade negotiator said, ending confusion caused by varied interpretations on both sides of the trade deal between Japan and the U.S.

U.S. Treasury Secretary Scott Bessent and Japan’s Minister in charge of Economic Revitalization Ryosei Akazawa.

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Key Facts

After a meeting with U.S. officials, Japan’s top trade negotiator Ryosei Akazawa told reporters at the Japanese embassy in Washington that the reciprocal tariff of 15% on Japanese imports will not stack on top of previously announced levies.

This is similar to the arrangement that the U.S. agreed with the European Union, as outlined in President Donald Trump’s July 31 executive order, but no such carve-out was mentioned for Japan.

The correction means that for items like fabrics, which faced an earlier tariff rate of 7.5%, the levy will rise to 15% instead of stacking up to 22.5% (15+7.5).

For other Japanese goods which already faced a tariff rate above 15%—like beef at 26.4%—the levy will remain the same and not see an additional 15% stacked on top.

Akazawa said the U.S. has also agreed to refund any excess tariff collected due to the “extremely regrettable” error in the administrative process.

What About Auto Tariffs?

The trade officials also said the White House will issue a new presidential order outlining a previously agreed-upon deal to lower tariffs on Japanese autos and auto parts to 15% from 27.5%. Trump had agreed to reduce the tariffs he previously imposed on Japanese cars in exchange for a $550 billion investment commitment from Japan.

How Have The Markets Reacted?

Japan’s benchmark Nikkei 225 index rose 1.85% to 41,820.48 points on Friday. Top Japanese automakers saw even bigger jumps as Toyota’s shares surged 3.47% to $18.77 (JPY 2,773). Honda and Subaru shares rose 3.95% and 5.37% respectively.

What Do We Know About The Japan Trade Deal?

President Donald Trump announced the trade deal with Japan last month in a Truth Social post, setting tariff rates at 15%, down from his earlier threats of 25%. Trump claimed that in exchange for the more favorable deal, Japan has agreed to invest $550 billion into the U.S. The president also claimed Japan would “open their Country to Trade, including Cars and Trucks, Rice and certain other Agricultural Products, and other things.” In a statement on X, Japanese Prime Minister Shigeru Ishiba said the trade deal was made with the goal of “prioritizing investment over tariffs,” and hailed it as a sign of a “new Golden Era for Japan and the U.S.” However, since the announcement, which was not followed by a jointly written formal agreement, the deal has been a subject to clashing interpretations.

What Do We Know About The $550 Billion Investment?

The $550 billion investment mentioned in Trump’s announcement has been the biggest source of confusion. In the announcement, the president claimed that the U.S. will “receive 90% of the Profits,” from the investment. Bessent also claimed this pledged amount will be “all new capital.” However, Japanese officials have stated that the country expects to fund only 1-2% of the promised $550 billion as a direct investment, and loans will make up a lion’s share the rest. In an interview with CNBC earlier this week, Trump compared the $550 billion to a “signing bonus that a baseball player would get.” He then added, “So I got a signing bonus from Japan of $550 billion. That’s our money. It’s our money to invest, as we like.” Akazawa on Thursday, downplayed the president’s latest comments as “just typical Trump talk.”