Trump Orders Implementation of U.S.–Japan Agreement

President Trump signed an executive order yesterday implementing the U.S.–Japan Agreement previously announced on July 22.

The EO sets the general tariff to 15% for imports from Japan with duty-free treatment for aerospace, generic pharmaceuticals and ingredients, while leaving room for further duty-free treatment for unavailable natural resources.

The details: The 15% tariff is a decrease from the 27% International Emergency Economic Powers Act “reciprocal” rate set in April.

MFN: Goods with a U.S. most-favored-nation tariff of less than 15% will have an additional IEEPA duty applied to bring the total tariff to 15%. Meanwhile, goods with a U.S. MFN tariff of more than 15% will have no additional tariffs.
Retroactive application: The 15% tariff will apply retroactively to products entered for consumption or withdrawn from warehouse for consumption on or after 12:01 a.m. EDT on Aug. 7, 2025. Companies should use standard Customs and Border Protection procedures to apply for refunds.
Rules of origin: The EO indicates the Commerce Secretary may issue rules for determining what are eligible “products of Japan.” This is an important development the NAM will monitor.

Sector-specific treatment: Several sectors received their own treatment in the EO:

Aerospace: The EO repeals IEEPA reciprocal tariffs as well as Section 232 steel, aluminum and copper tariffs from applying to imports from Japan covered by the World Trade Organization Agreement on Trade in Civil Aircraft. CBP will issue separate guidance within seven days to effectuate this change, which may also articulate new rules of origin.
Autos adjusted to 15%: Autos and auto parts from Japan will be 15% as determined by MFN. For MFN below 15%, additional duties will apply under Section 232 rather than IEEPA. This may be the first indication that 232 tariffs will begin to replace IEEPA tariffs if a court ruling disallows IEEPA tariffs. CBP will issue separate guidance within seven days on this change, in which it may also articulate new rules of origin.

Unavailable natural resources: According to the EO, the Commerce Secretary may determine products of Japan that are natural resources unavailable (or unavailable at sufficient scale to satisfy domestic demand) in the U.S. that may be eligible for zero duty.

The EO specifies generic pharmaceuticals, generic pharmaceutical ingredients and generic pharmaceutical chemical precursors for zero duty under this provision.

Reciprocity: Details about any new market access for U.S. manufacturing exports remain unavailable for now.