The news of a new U.S.-Tokyo trade deal that will lower tariffs on Japanese car imports caused South Korean and Japanese automotive stocks to spike higher on July 23. Investor mood was further enhanced by the action, which stoked expectations that South Korea may soon negotiate a comparable agreement.
According to people familiar with the arrangement, the United States would reduce its 25 percent duty on Japanese auto imports to 15 percent under the terms of the agreement. Shares of major Japanese automakers surged after President Donald Trump’s pronouncement, with one climbing 13% and another more than 9%. Japan’s leading exporters are less under pressure in their most significant foreign market thanks to the lower tariff.
With hopes that Seoul and Washington may soon negotiate a similar trade agreement, South Korean automakers also reported significant gains, rising more than 6%. Both nations are important friends of the United States in Asia and significant exporters of automobiles worldwide.
The White House is finalizing a number of trade agreements before a deadline of August 1st, when higher import taxes are scheduled to go into effect, and the new agreement with Japan is regarded as the most important of these.
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