Trump tariffs: US–Japan deal finalized; Indonesia holds lessons and warnings for India

The announcements by U.S. President Donald Trump and the White House regarding trade deals with Japan and details of the deal with Indonesia on Tuesday (July 22, 2025) will have significant implications and lessons for a potential trade deal with India, according to officials and trade experts.

Mr. Trump on Tuesday (July 22, 2025) announced that the U.S. had completed a “massive deal” with Japan. Simultaneously, the White House also released the framework for the deal with Indonesia, which had been announced last week.

According to Mr. Trump, Japan has agreed to invest $550 billion in the U.S. under the deal, which would create “hundreds of thousands” of jobs in the U.S. Also, Japanese imports into the U.S. will face a 15% tariff, down from the proposed 25%.

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Under the deal, Japan has also agreed to import a larger share of rice from the U.S. under its tariff-free quota. According to a World Trade Organisation (WTO) minimum access framework agreement signed in 1995, Japan imports about 7,70,000 metric tons of tariff-free rice every year. According to some reports, the U.S. accounted for 45% of the total in the last financial year. This share could now increase.

According to Mr. Trump, Japan will open several sectors to U.S. imports, including cars, trucks, and agricultural products. The Hindu has previously reported how agriculture remains a major impediment in the ongoing negotiations for a trade deal between India and the U.S.

“India is of course monitoring all the deals that are being struck with the U.S., but it’s also important to remember that these are deals so far in words and have not been officially signed yet,” according to a source.

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“But it is significant that agriculture entered the U.S. deal with Japan,” he added. “It is important to examine the ring-fencing of rice imports that Japan has ensured.”

Following Mr. Trump’s announcement, Japanese Prime Minister Shigeru Ishiba was quoted by Reuters as telling reporters that “import volumes (of rice) will remain within the minimum access framework and we retain the discretion over how much and what type to import from each country”.

The framework for the trade deal with Indonesia reveals that that country would remove tariffs on about 99% of items industrial, food and agricultural items imported from the U.S. In addition, the framework also includes several upcoming acquisitions by Indonesia of products from the U.S.

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These include aircraft worth $3.2 billion, agriculture products, including soybeans, soybeans meal, wheat and cotton worth $4.5 billion and energy products, including liquefied petroleum gas, crude oil and gasoline, worth $15 billion.

The U.S. will impose a 19% tariff on Indonesia, down from the 32% he had said would be imposed from August 1. The U.S.–Indonesia trade deal forces Jakarta to give up key domestic regulations that have long protected its industries, food safety and digital space.

“The U.S.–Indonesia trade deal is a clear example of how aggressive U.S. pressure can force countries to slash tariffs, commit to large purchases, and give up control over their own regulations,” Ajay Srivastava, former Director General of Foreign Trade and founder of Global Trade Research Initiative said. “India must be careful not to fall into the same trap.”