What Happened?
On October 28, 2025, the governments of the United States and Japan signed the United States-Japan Framework (US-Japan Framework) to coordinate on securing and refining important minerals. The US-Japan Framework is part of a bilateral strategic trade and investment agreement between the two countries and includes provisions to encourage Japanese investment in US critical energy infrastructure and critical minerals, and to outline the US commitment for reduced tariffs for Japanese goods. The Framework follows Executive Order 14345 and the September announcements outlining the trade deal.
The Bottom Line
The US-Japan Framework announces investment in key US sectors for energy, critical minerals, AI and electronics, and signals an easing of trade tensions between the two countries. Companies operating in these sectors and with cross-border relationships between the US and Japan should note these developments. The US-Japan Framework also signals US trade priorities and indicates how similar trade agreements between the United States and other countries may take shape in the future.
The Full Story
In July 2025, the Trump administration announced that the United States reached a trade deal with Japan that included a flat 15 percent tariff on nearly all Japanese goods and commitments from Japan to reduce non-tariff barriers and invest billions of dollars in the United States. In Executive Order 14345 of September 4, 2025, President Trump directed the Secretary of Commerce, in consultation with the United States Trade Representative, the Secretary of Homeland Security and the Chair of the United States International Trade Commission, to reduce stacked tariffs and impose a flat 15 percent duty on almost all Japanese imports. The United States and Japan signed a Memorandum of Understanding (MOU) in September outlining strategic investments in the United States. The US-Japan Framework memorializes trade commitments between the two countries and investments under the MOU in the United States.
Tariffs on Japanese Goods
Under Executive Order 14345, the 15 percent rate for Japanese imports will not “stack” on top of existing tariff rates. The 15 percent rate is inclusive of any most-favored nation (MFN) tariff rate above zero applied by the United States to goods not traded under a free trade agreement. If the MFN rate is above 15 percent, no additional tariff pursuant to the International Emergency Economic Powers Act (IEEPA) will be applied to Japanese goods. The new 15 percent tariff rate is retroactive to August 7, 2025, subject to an exception for Japanese automotive products, which face a 15 percent tariff, inclusive of MFN rates, effective September 16, 2025. Japanese products under the World Trade Organization Agreement on Trade in Civil Aircraft (except for unmanned aircraft) will be exempt from additional tariffs under IEEPA and Section 232 of the Trade Expansion Act on steel, aluminum, and copper. Executive Order 14345 leaves open the possibility that other Japanese products, including natural resources and generic pharmaceuticals, could be granted duty-free treatment following an assessment of the Secretary of Commerce regarding US national interests and Japan’s actions to carry out its commitments, including those under the US-Japan Framework.
Investment Commitments
According to a Fact Sheet published to announce the US-Japan Framework, Japan and various Japanese companies have committed to significant investments and collaborations in energy, infrastructure and industrial projects in the United States, to include:
Critical Energy Infrastructure Investments:
- Up to $332 billion to support critical energy infrastructure in the United States, including the construction of AP1000 nuclear power plants and small modular reactors (SMRs), the supply of large-scale baseload power infrastructure, engineering, procurement and other services to build critical power plants, substations and transmission systems, design, procurement and maintenance services for large-scale power infrastructure, and natural gas transmission and power infrastructure services.
- Up to $25 billion to supply large-scale power equipment such as gas turbines, steam turbines and generators for grid electrification and stabilization systems, including high-voltage direct current and substation solutions for mission-critical facilities.
- Up to $25 billion to supply electrical power modules, transformers and other power-generation substation equipment.
- Up to $20 billion to supply thermal cooling systems and solutions, including chillers, air handling systems and coolant distribution units essential for power infrastructure.
AI Infrastructure Investments:
- Up to $30 billion to supply power station systems and equipment for data centers.
- Up to $25 billion for advanced electronic components and power modules.
- Up to $20 billion to supply fiber optic cables.
Electronics and Supply Chain Investments:
- Up to $15 billion to produce advanced electronic components, including multilayer ceramic capacitors, inductors and electromagnetic interference suppression filters.
- Up to $15 billion to supply energy storage systems and electronic devices and components.
Critical Minerals Investments:
- Up to $3 billion to construct an ammonia and urea fertilizer facility in the United States
- Up to$2 billion to construct a copper smelting and refining facility in the western United States.
Manufacturing and Logistics Investments:
- $600 million to upgrade ports and waterways across the southern United States to facilitate the export of US crude oil.
- $500 million to establish a high-pressure, high-temperature diamond grit manufacturing facility in the United States.
- $350 million to construct a lithium-iron-phosphate production facility in the United States.
Trade and Defense Commitments
According to the Fact Sheet, Japan has also committed to further expand opportunities for US exports to Japan, including exports of some US-made vehicles to Japan, and to enhance distribution platform in Japan for US automakers to facilitate the sale of US manufactured and US safety-certified vehicles without additional testing in Japan. According to a Joint Statement issued in July, Japan already agreed to expedite increased purchases of US rice, and to make significant annual purchases of US agricultural goods and US energy. Japan has also committed to implement its anti-competition law applicable to smartphone software in a way that does not discriminate against US companies, balances the need for fair and free competition with user safety and convenience, and respects the legitimate exercise of intellectual property rights. The Fact Sheet notes US commitments to Japan’s defense sector, AI collaboration, and intelligence sharing.