The newly completed commercial agreement between the United States and Japan has subsided fears of a global trade war and may become a model for other countries negotiating with Washington, according to the economists.
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The deal from the American customs tariffs on Japanese car imports reduce from 27.5 % to 15 % and reduce duties on other Japanese commodities from 25 % to 15 %. Although it is still important, the average of 15 % is seen as management and less destroyed than previous levels or threats looming on the horizon.
Economists say that the agreement provides a clarification that affects the need for companies that are fighting to make investment decisions amid uncertainty in politics. “The average definitions in the United States were about 2.5 % in 2024, and now it is closer to 17 %,” said Mohit Kumar of Jeffrez. “Although it is not perfect, 15 % is something that the global economy can absorb.”
The deal also includes obligations for Japanese investment and loans associated with trade related to the United States, making it the most influential agreement that Donald Trump has so far. It increases the pressure on China and the European Union, who face quick final dates in August to settle its own trade negotiations with the United States
Global markets responded positively. The stock index in Japan in Japan jumped by 3.5 %, while European car manufacturers with significant exposure to the United States increased. Volvo, BMW, Porsche, Mercedes-Benz and Volkswagen shares increased between 4 % and 10 %.
“This positive momentum gives investors the hope that other large economies can reach practical agreements,” said Derek Halini, a MUFG analyst, said. “We are witnessing a group of 10 % to 15 % that appear as a new standard for customs tariff levels between major economies.”
While the Japanese Japanese deal has been in immediate concerns, the risks remain. The European Union still faces the threat of the US tariff by 30 % if an agreement is not reached by August 1. This level will significantly disrupt the European Union and the United States trade, with early 10 % up to a higher compromise.
China is also under pressure, with a deadline looming on August 12, which can see the upcoming tariffs to 145 % on American goods and 125 % on Chinese exports if the conversations fail or the extensions are not secured.
Ji said, “The Japan deal is likely to push the other Asian countries to accelerate negotiations,” Ji said. “We have already seen signed agreements with the Philippines and Indonesia, and more deals are expected before August 1.”
Meanwhile, the long -term inflation forecast has decreased slightly in the United States after the Japan Agreement, which raised hopes for the continued trade progress that could reduce price pressures and allow the Federal Reserve eventually given price discounts. However, no price changes are expected at the next meeting of federal reserve studies, and the markets do not expect a completely reduction until October.
