The White House sent a firm letter to Japan’s Prime Minister on July 7, 2025, citing deep concerns over the long-standing trade imbalance, and will impose a 25% tariff on all goods imported into the US.
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The U.S. values its trading relationship with Japan but is concerned about the significant trade deficit.
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The U.S. has decided to move forward with Japan on the basis of more balanced and fair trade.
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Starting August 1, 2025, the U.S. will impose a 25% tariff on all Japanese products entering the U.S., separate from existing sectoral tariffs.
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Products routed through third countries to avoid tariffs will still be subject to the higher tariff.
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The 25% tariff is described as modest compared to the trade imbalance the U.S. seeks to correct.
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No tariffs will apply to Japanese companies that manufacture within the United States.
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The U.S. will support fast-track approvals for such domestic investments.
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If Japan increases its tariffs in response, additional U.S. tariffs will be applied on top of the 25%.
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The letter accuses Japan of many years of non-reciprocal tariff and non-tariff barriers, contributing to an unsustainable trade deficit.
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The U.S. views this deficit as a threat to the economy and national security.
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The U.S. expresses willingness to adjust tariffs (up or down) based on Japan’s openness to U.S. markets.
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Ends with an invitation to work as long-term trade partners, but emphasizes that Japan must act to eliminate barriers for any adjustments to be made.
The price of major indices has moved lower with the S&P now down -0.89%. The Nasdaq has moved lower as well with the price low reaching 6215.25. The price is now at 6228 or -0.81%. A similar letter was sent to So. Korea.
Below is the letter to Japan.
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