US President Donald Trump said he had reached a trade deal with Japan on Tuesday.

Under the new terms, the US will place a 15% tariff on goods imported from Japan, down from a previously threatened 25% tariff.

Trump also claimed that Japan would invest $550 billion (€468.5 billion) in the United States "at my direction" and would "open" its economy to American autos and rice.

"This deal will create hundreds of thousands of jobs — there has never been anything like it," Trump posted on Truth Social.

He added that the United States "will continue to always have a great relationship with the country of Japan."

How did Japan react to the announcement?

Japanese Prime Minister Shigeru Ishiba said he was ready to meet or speak over the phone with Trump after being briefed on the details by Japan's top trade negotiator Ryosei Akazawa, who has been in Washington for talks.

"As for what to make of the outcome of the negotiations, I am not able to discuss it until after we carefully examine the details of the negotiations and the agreement," Ishiba told reporters in Tokyo after Trump's announcement. 

Meanwhile, Akazawa posted on X: "Mission accomplished."

Shares in Japanese automakers jumped following the announcement, with Mazda up 12%, Toyota up around 10%, Honda up by over 8% and and Nissan up 6.5%.

More broadly, the Nikkei rose 1.7% off the back of the news.

"Japan's success in avoiding the earlier proposed 25% tariff and securing a lower rate for autos is a positive outcome for the Japanese economy," said Kazutaka Maeda, an economist with the Meiji Yasuda Research Institute in Tokyo.

"This deal reduces the risk of a recession. However, the timing of the agreement is politically unfortunate. Had Prime Minister Shigeru Ishiba finalized the deal before Sunday's upper house election, it might have bolstered his party's performance." 

Edited by: Srinivas Mazumdaru