Japan’s Trade Concessions Signal a New US Playbook: Capital for Access

Lale Akoner, Global Markets Analyst at eToro, says: “The US-Japan trade deal settles auto tariffs at 15%, avoiding a harsher 25% rate and offering near-term relief to Japan’s export sector. In exchange, Japan committed to significant purchases such as $8bn in US goods, Boeing aircrafts, defense spending and, perhaps more surprisingly, $550bn investment fund to be deployed in the US. The fund, structured with minimal transparency, effectively hands Washington influence over Japanese capital, blurring the lines between trade and industrial policy.

“Japan’s macro pressures, demographic decline, inflation risk, and policy constraints, left it little choice. The concessions made show how economic and political fragility erodes negotiating power. While the investment fund helps preserve market access to US capital without straining the fiscal balances in the short term, committing such a large sum in the investment fund may trigger political backlash over the long term.

“We expect this outcome to resonate in Brussels. The EU is finalising its own trade deal with Washington ahead of looming 30% tariffs, particularly on autos. Japan’s deal suggests a pathway to de-escalation, but at a price. That’s a constructive signal for German equities and carmakers, but also a warning that future US trade diplomacy may hinge less on tariffs and more on capital.”

Markets are jubilant but this is hardly a catalyst for long term growth, according to George Lagarias, Chief Economist at Forvis Mazars. 

“At 15%, the US tariff on Japanese goods does not give much cause for long term celebration, despite the positive initial market reaction. Much higher product tariffs are not included in the deal. The number will still likely contribute to an increase of US inflation and put pressures on real growth for both countries. Why are the markets jubilant this morning? Because even a higher tariff is preferable to continued uncertainty. But this is hardly a catalyst for long term optimism. If the deal with Japan is the standard by which the negotiation with the EU will go, then investors and businesses should begin to price in a deterioration of the macroeconomic backdrop.”