IMPLEMENTING THE UNITED STATES–JAPAN AGREEMENT

Implementing the United States – Japan Agreement

On September 4, 2025, the President signed an Executive Order regarding Japan. Under this action, goods from Japan will now be subject to treatment consistent with that of EU countries, including the application of an ad valorem duty rate of no less than 15%. This applies across product categories, including aerospace, automobiles, and automotive parts.

The Executive Order specifies that these measures are effective retroactively to August 7, 2025. Below is the breakdown of the changes and the steps we will need to take moving forward:

1. How the tariff is calculated (subsection a of the EO):
   • The current U.S. tariff for the Japanese product in the HTSUS “Column 1 Duty Rate”, if the rate is less than 15%, then the 15% ad valorem duty rate is applied plus the duty provided in the applicable subheading.   
   • If that rate is 15% or higher, then there’s no extra duty added.
   • If the duty is expressed as a specific rate or a compound rate (instead of pure %), the same treatment applies as it does for EU goods under Executive Order 14326 (likely meaning they convert to an “ad valorem equivalent” to compare against the 15%).
2. Superseding prior tariffs:
   • These duties replace the ones previously imposed under Executive Order 14257.
3. Retroactive effect (subsection d):
   • These tariffs are effective retroactively starting 12:01 a.m. EDT on August 7, 2025.
   • Products from Japan entered or withdrawn for consumption on or after that date will be subject to the new tariff rules.
   • Refunds (if overpaid under the prior tariff structure) will be processed through standard CBP procedures.
   • Sec. 4 of the EO is essentially mirroring the general tariff rule from Sec. 2, but it applies specifically to automobiles and auto parts that were previously covered by Proclamation 10908 (the March 2025 Section 232 tariffs). Here’s a breakdown in plain language:

Key Points from Sec. 4:

1. What’s changing:
   • Instead of the section 232 tariffs from Proclamation 10908, the duty rate on Japanese autos and parts will now follow this order’s rule.
2. How the tariff is calculated:
   • Look at the product’s Column 1 Duty Rate in the HTSUS.
   • If it’s less than 15%, the total duty plus the 15% ad valorem rate will be applied.  
   • If it’s 15% or higher, the additional duty is 0% (so it stays at that rate).
3. Effective date:
   • This takes effect as of the date the Federal Register notice is published (not retroactive like Sec. 2).  

For further details, here is the link to the full Executive Order: Implementing The United States–Japan Agreement – The White House

If you have any questions, please feel free to contact your Western Overseas Representative.