Why It Matters

The U.S.-Japan trade relationship faces mounting uncertainty as multiple tariff mechanisms overlap and key policy commitments remain unfulfilled, according to a recent Congressional Research Service report.

A comprehensive bilateral free trade agreement has never materialized between the two countries, and the administration has not pursued one.

The Big Picture

The U.S. and Japan announced a strategic trade and investment agreement in July 2025, which included a 15 percent tariff on most Japanese imports. That framework capped Section 232 tariffs on Japanese steel and autos at 15 percent.

In February, the U.S. Supreme Court held that the International Emergency Economic Powers Act does not grant the President authority to impose tariffs. The President then imposed a global 10 percent temporary import surcharge under Section 122 of the Trade Act of 1974, which expired in July.

That same month, the U.S. Trade Representative imposed a 12.5 percent tariff on Japan following an investigation into Japan's alleged failure to enforce bans on imports made with forced labor. Japanese automotive products face a 15 percent tariff inclusive of most-favored-nation rates, effective September 16, 2025, with the baseline 15 percent tariff on most Japanese goods also inclusive of existing rates, meaning it does not stack on prior levies.

The 2019 U.S.-Japan Trade Agreement covered roughly 5% of U.S. goods imports from Japan and approximately 18% of Japan's goods imports from the United States. It addressed roughly 5 percent of U.S. goods imports from Japan and roughly 18 percent of Japan's goods imports from the U.S. A Section 301 investigation into structural excess capacity and manufacturing in Japan is ongoing.

The Bottom Line

Japan has concluded major free trade agreements with the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, the European Union, and the Regional Comprehensive Economic Partnership that the United States is not party to. The 2020 trade agreements were described as stage one of a broader free trade agreement, but further negotiations covering autos and services never materialized. The administration retains the right to impose tariffs if Japan fails to fund promised investments, and most announced projects to date are in energy.

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