Tariffs at 15%, Investments at $550 Billion — Major Shift in Japan-U.S. Relations: "Melting Tariffs with Investments" : Exchange Rates to the Market, Tariffs to Politics

On September 4th (Eastern Time), the United States issued an executive order applying a "principle 15%" tariff on imports from Japan. Meanwhile, a framework for the Japanese government and government-affiliated financial institutions to invest a total of $550 billion (approximately 80 trillion yen) in U.S. national security-related projects has been set in motion. The investment projects will be selected by the U.S. government, with the initial cash flow distribution being 50:50 between the U.S. and Japan. After the investment is recouped, the distribution will shift to 90:10 in favor of the U.S., according to reports. On September 12th, a joint U.S.-Japan statement on foreign exchange was also released, stating that exchange rates should be determined by the market, while leaving room for intervention in the case of excessive fluctuations. On social media, there are mixed reactions, with some welcoming the move as beneficial for U.S. industrial reconstruction, and others expressing concern that Japan's discretion is too limited and that it is taking on high-risk projects. For domestic companies, the fixed 15% tariff on automobiles provides some reassurance, but there remains uncertainty as the burden and returns could vary significantly depending on the specifics of the investments.