The US-Japan trade agreement sets a 15% tariff on Japanese imports, down from the previously proposed 25%.
Japan has committed to a $550B investment in the US economy as part of the deal.
Construction may see limited relief as steel and aluminum remain excluded from the agreement and will continue to face a 50% tariff.
After months of escalating threats, on July 23, 2025, President Trump announced a new bilateral trade agreement with Japan that sets a reciprocal 15% tariff on Japanese imports, including automobiles, down from the previously proposed 25%.
As part of the deal, Japan has committed to a $550 billion investment in the United States economy. President Trump characterized the pledge as “potentially the largest deal ever made,” though further details have not been released.
The agreement has been hailed by the Trump administration as a major de-escalation of trade tensions and a catalyst for investment between the United States and Japan.
The agreement includes several notable concessions on both sides.
The United States will reduce proposed tariffs on Japanese imports, including automobiles, from 25% to 15%.
Japan will lower trade barriers on US goods, including vehicles, rice, and select agricultural products. Japanese regulatory agencies have also agreed to relax certain vehicle testing requirements to facilitate US exports.
Japan has also committed to a $550B investment in the US economy, for which details have yet to be announced.
Steel and aluminum remain excluded from the agreement and will continue to face a 50% tariff.
In 2024, the United States imported significant amounts of key construction materials from Japan, including $2.73B in plastics, $2.49B in rubber products, $1.84B in articles of iron and steel, and $1.26B in raw iron and steel, according to Trading Economics.
The continued 50% tariff on steel and aluminum, including Japanese imports, suggests that these categories will remain cost-sensitive. Steel and iron products make up the most significant portion of US construction material imports from Japan, meaning the tariff deal will not be as significant for the construction industry as for the automobile industry.
However, the broader realignment in US-Japan trade policy could dampen Japan’s exposure to future sector-specific tariffs.
The Japanese government has expressed satisfaction with the deal, describing it as a stabilizing move for economic relations.
This agreement sends a mixed signal to the construction sector. It shows a shift toward trade normalization with a key global partner, but its limited scope means core construction materials, including metals, remain under tariff pressure.
Future negotiations may offer opportunities to revisit these sectors, but for now, material pricing and procurement teams should continue to account for volatility in Japanese-sourced goods, particularly steel and aluminum.
Full documentation of the agreement has yet to be made public. Additional announcements related to the investment commitment and timeline are expected in the coming weeks.
Meanwhile, the White House continues parallel trade negotiations with the European Union, South Korea, and Southeast Asian economies, all of which could further impact global materials markets.
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