President Donald Trump announced a trade agreement with Japan on Tuesday, making it the largest U.S. trade partner to broker an accord as the White House threatens to impose tariffs on dozens of countries within days.

Analysts at Bank of America said that the Japan deal "looks like a reasonable blueprint" for other auto-exporting countries like South Korea.

View PDF After more than three months of formal negotiations and many more months of speculation about the Trump administration’s trade and economic policy toward Japan, Washington and Tokyo have agreed to a trade deal.

After months of fraught negotiations with the United States, Japan clinched a deal just days before punitive tariffs were scheduled to take effect.

The U.S. is significantly reliant on the Taiwanese company for advanced chip manufacturing, raising concerns due to its proximity to China.

The deal imposes 15% tariffs on Japanese cars and other goods, one of the more favorable rates. While the start date and other basic elements are still unknown, Treasury Secretary Scott Bessent warned this week that the US would monitor implementation and bump the rate up to 25% if Trump isn’t satisfied.

The U.S. trade deal will further support improving economic fundamentals in Japan, which underpin our constructive equity positioning on the country.

Japanese automakers breathed a sigh of relief after U.S. President Donald Trump finalized a trade agreement last week. However, the relief is tempered by intensifying competition, especially from China,