Yen rebounds in the short term; reports: US and Japan close to reaching an agreement to lower auto tariffs.

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According to media reports on the 4th, the United States and Japan have entered the final negotiation stage for implementing an agreement to lower tariffs on Japanese automobile imports, and a key presidential executive order could be issued within the next 10 to 14 days. The Japanese yen rebounded briefly after the news broke, then retreated, and the USD/JPY exchange rate is now at 148.3.

The outlet, citing sources, revealed that once the executive order is signed, the new tariff rate will come into effect. This means that U.S. tariffs on Japanese automobiles are expected to be sharply reduced from the current 27.5% to 15% before the end of this month. According to CCTV News, as of April 3, the U.S. tariff on automobiles imported from Japan was sharply raised from the original 2.5% to 27.5%.

This is undoubtedly a major positive development for Japanese automakers who have been waiting for the agreement to materialize. To promote this matter, Japan's chief trade negotiator Ryosei Akazawa has flown to Washington for consultations as of Thursday.

Sources say negotiations have entered the "final stage," with the goal of rapidly issuing the executive order after Ryosei Akazawa arrives. However, the specific effective date of the executive order is still under discussion, and the final decision will rest with the U.S. President, Donald Trump.

Tariff Execution Details Emerge, Agreement Covers Broader Trade Arrangements

According to sources cited by the media, the forthcoming executive order is expected to clarify specific details regarding the execution of the tariffs. A key provision is that the new 15% tariff rate agreed upon in July will not be compounded with any other higher possible tariffs.

In addition, the order will clarify that for Japanese imports previously taxed at less than 15%, the rate will be uniformly adjusted to 15%.

This automobile tariff agreement is not an isolated event, but part of a broader U.S.-Japan trade arrangement. It is reported that the executive order will also mention other commitments Japan made to reach the agreement. According to sources, these commitments include Japan's plans to expand imports of U.S. rice and increase purchases of U.S.-made aircraft.

Apart from tariffs and trade purchases, the agreement also includes a massive investment plan. As part of the July trade agreement, Japan has agreed to a package of U.S.-bound investments totaling up to $550 billion. This investment package will be carried out through equity, loans, and guarantees, by Japanese government-backed banks. It is expected that a joint statement, as well as a memorandum outlining the rules of the investment plan, will be released at the same time as the presidential executive order. The media quoted sources as saying:

"Once the executive order is issued, our next step will be to formulate plans to implement these investment projects."

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