The new trade agreement between the United States and Japan ~ hailed by President Donald Trump as the “largest trade deal in history” ~ may be hyperbolically framed, but its significance for Asia and the global economy is hard to overstate. In one swift anno – uncement, two of the world’s largest economies have not only de-escalated tensions triggered by months of tariff threats, but also set a fresh benchmark for future trade diplomacy across the Indo-Pacific.

At the core of the agreement is a dramatic reduction in tariffs on Japanese auto imports into the US, from a punishing 25 per cent to a more manageable 15 per cent. In return, Japan has pledged a $550 billion investment and loan package to bolster US supply chains, particularly in critical sectors like pharmaceuticals and semiconductors. The immediate winners are Japan’s flagship automakers ~ Toyota, Honda, and Nissan ~ which now enjoy a clearer path into the US market.........

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