U.S. and Japan Reach Trade Deal

Summary

WSJ What's News: U.S. and Japan Reach Trade Deal – July 23, 2025

Hosted by The Wall Street Journal

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1. Introduction to the US-Japan Trade Deal

In the latest episode of WSJ's "What's News," host Azhar Sukri delves into the landmark trade agreement between the United States and Japan. Released on July 23, 2025, the episode provides an in-depth analysis of the deal's implications for both economies and global markets.

2. Details of the US-Japan Trade Agreement

Azhar Sukri opens the discussion by outlining the key components of the trade deal. President Donald Trump announced the imposition of a 15% tariff on Japanese goods, a reduction from the initially threatened 25% tariff rate set to take effect on August 1st.

Trump highlighted the agreement's financial aspects, stating, "Japan will invest $550 billion in the US as part of the deal and that the US will receive 90% of the profits from the investments" (00:33). Although specific details remain scarce, the promise of substantial Japanese investment in the American economy marks a significant development in bilateral relations.

3. Sectors Impacted and Tariff Reductions

Jason Douglas, the WSJ Tokyo bureau chief, elaborates on the sectors opened to trade under the new agreement. Notably, the automotive sector faces reduced tariffs, a critical victory for Japan's renowned auto industry. “The tariffs on cars are going to also be 15%. And that's pretty important for Japan, which has, everyone knows as a powerhouse auto sector,” Douglas explains (01:41).

Additionally, the deal encompasses cooperation on economic security, focusing on supply chains, semiconductors, and critical minerals. Japan has also committed to increasing imports of American rice, aligning with President Trump's objectives.

4. Reactions from Japanese Leadership and Investors

Japanese Prime Minister Shigeru Ishiba lauded the agreement, emphasizing his government's commitment to national interests despite recent political setbacks. “02:16” Jason Douglas notes that investor sentiment has improved, viewing the tariff reduction as a stabilizing factor for Japan’s economy. Stock markets responded positively, with shares of automotive giants like Toyota, Honda, and Nissan rising, indicating investor confidence in the enduring US-Japan economic partnership.

5. Implications of the Ongoing Trade War

Despite the optimism surrounding the trade deal, Douglas cautions about the broader context of the US-Japan trade war. “02:40” He warns that tariffs generally lead to higher consumer prices, reduced exports, and potential declines in business investment. While the US and global economies have shown resilience, the long-term effects of the trade war are expected to continue unfolding.

6. US Trade Deadline and Ongoing Negotiations

As the self-imposed August 1st deadline approaches for countries to finalize trade agreements with Washington, the Trump administration leverages the threat of tariffs to prevent other nations from imposing new taxes and regulations on American tech firms. Discussions with countries like Brazil, South Korea, and the European Union remain contentious, particularly concerning regulations targeting major US internet companies.

7. Technology Sector and the Magnificent Seven

Transitioning to the technology sector, the episode highlights the performance and future prospects of the "Magnificent Seven" (Mag 7) tech giants, including Apple, Tesla, and Alphabet. Roshan Fernandez, a WSJ reporter, discusses the diverging fortunes within this group. “05:04” Fernandez cites Dan Ives of Wedbush Securities, who observes a performance split: “In the Mag 7 there's the cool kids table and then there's Apple, Tesla and Alphabet there by the kitchen at the bad table wishing that they were at the cool kids table.”

8. Upcoming Earnings Reports and AI Investments

Fernandez anticipates significant earnings reports from Tesla and Alphabet, focusing on their investments in artificial intelligence (AI). Tesla’s recent rollout of its robo-taxi in Austin and its investment in Xai signify a strategic pivot towards AI and robotics. “06:24” He notes that Alphabet is recovering despite challenges like antitrust issues, with investors keen to see progress on AI initiatives such as Google's Gemini.

9. Trump's Political Attacks on Obama and Others

The episode shifts to President Trump's intensified political rhetoric, targeting former President Barack Obama, Hillary Clinton, and Joe Biden. Speaking from the Oval Office, Trump urged the Justice Department to investigate his political rivals. “09:08” This outburst coincided with scrutiny over Jeffrey Epstein, with Trump denouncing the investigations as a "witch hunt."

10. Morgan Stanley Investigation

Regulatory pressures mount as the Financial Industry Regulatory Authority (FINRA) investigates Morgan Stanley for potential lapses in vetting clients for money laundering risks (08:28). This investigation adds to existing federal probes into the bank's anti-money laundering practices. Morgan Stanley has responded by highlighting its substantial investments in compliance programs over recent years.

11. Resurgence of Meme Stocks

Revisiting the meme stock phenomenon reminiscent of 2021, the episode highlights renewed interest in companies like Kohl’s and Opendoor Technologies. Caitlin McCabe, a markets reporter, explains that retailers and real estate platforms are capturing individual investors' attention on online forums. “11:46” She notes Kohl’s impeccable single-day performance and Opendoor’s impressive stock jumps, fueled by traders rallying against professional investors betting against these stocks.

McCabe contextualizes this trend within the broader macroeconomic landscape marked by tariff uncertainties and high market valuations. “12:13” She observes that during periods of market exuberance, such as all-time high stock indexes and soaring Bitcoin prices, meme stocks naturally thrive as individual investors seek to capitalize on bullish sentiments.

12. Conclusion

Azhar Sukri wraps up the episode by acknowledging the multifaceted nature of current market dynamics, from international trade agreements to the volatile nature of meme stocks and ongoing political tensions. Produced by Daniel Bark and Kate Bullivant, with supervision by Sandra Kilhoff, the episode offers listeners a comprehensive overview of factors shaping the global economic and political landscape.

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Notable Quotes:

• Trump on Japanese Investment: “Japan will invest $550 billion in the US as part of the deal and that the US will receive 90% of the profits from the investments” (00:33)

• Dan Ives on Magnificent Seven: “In the Mag 7 there's the cool kids table and then there's Apple, Tesla and Alphabet there by the kitchen at the bad table wishing that they were at the cool kids table” (05:04)

• Apple’s AI Challenges: “Their AI powered Siri, their Apple intelligence service, has kind of come up short of promises” (05:40)

• Caitlin McCabe on Meme Stocks: “Bitcoin is trading around $120,000 and meme stocks are just almost this natural extension of that during these periods of market exuberance” (12:20)

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This summary provides a comprehensive overview of the "What's News" episode titled "U.S. and Japan Reach Trade Deal," capturing all essential discussions, insights, and conclusions for listeners seeking to stay informed without tuning into the entire podcast.

Transcript

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[Azhar Sukri]

The US and Japan reach a trade Deal what we've had so.

[Unnamed Viking Advertiser]

Far are deals with Vietnam, Indonesia, the Philippines. These are all important countries, but Japan is really the first, you know, really huge country that President Trump has negotiated a deal with. He called it one of the biggest deals ever.

[Azhar Sukri]

Plus, facing more questions about Jeffrey Epstein, Trump tries to turn the attention on his political enemies, including Barack Obama. And investors cheer on a new class of meme stocks. It's Wednesday, July 23rd. I'm Azhar Sucri for the Wall Street Journal. Here is the AM Edition of what's news, the top headlines and business stories moving your world. Today, the US And Japan have reached a trade agreement, with President Trump saying that he will set tariffs on the country at 15%. In a social media post, Trump said Japan will invest $550 billion in the US as part of the deal and that the US will receive 90% of the profits from the investments, although he did not provide details. Jason Douglas is our Tokyo bureau chief. He says in return, Japan has agreed to open to trade in a number of sectors, which will see the US Lower the tariff rate Trump had threatened recently in a letter to the Japanese government.

[Unnamed Viking Advertiser]

So those were going to be at 25% when they came in on August 1, and Japan has negotiated that down to 15%. Crucially for Japan, that includes autos. So the tariffs on cars are going to also be 15%. And that's pretty important for Japan, which has, everyone knows as a powerhouse auto sector. So important for companies like Toyota, Honda and Nissan, there's going to be more cooperation on what in Japan they call economic security. So that's really around supply chains, semiconductors, critical minerals. And then finally, Japan has agreed to buy more American rice, which was a key goal of President Trump.

[Azhar Sukri]

Japanese Prime Minister Shigeru Ishiba welcomed the deal, saying his government was determined to protect the national interests. Just days after the ruling coalition suffered a significant setback in parliamentary elections, which threatened to derail the talks. Jason says with the tariff reduction, investors are now viewing the blow to Japan's economy as less severe than previously feared.

[Unnamed Viking Advertiser]

Stocks are up, the stock market is up, shares of companies like Toyota are up, suggesting that investors think that having a deal is really going to put a floor under US Japan relations and help the economy. But overall, we shouldn't forget that this is a trade war and this means Tariffs tend to mean higher prices for consumers, tend to mean over time, less exports, tend to affect things like business investment and so on. So I think although the US and global economies have been resilient so far in this trade war, the effects will still continue to play out well.

[Azhar Sukri]

As the self imposed August 1 deadline for countries to agree trade deals with Washington draws closer, the Trump administration is using the threat of tariffs and promise of access to the US Market to stop multiple countries from imposing new taxes, regulating and tariffs on American tech firms and their products, according to people familiar with the discussions. Measures targeting America's Internet giants remain a sticking point in discussions with Brazil, South Korea and the European Union. Brazil is focused on resuming trade talks, not retaliatory measures, a government official said. The European Commission, which is in charge of EU trade policy, declined to comment, while the South Korean embassy didn't respond to requests for comment. Tech companies have waged a years long campaign for the government to protect the sector, warning that what they call unfair taxes and regulations overseas could restrict the amount they can invest in the US President Trump is expected to give a major speech today on winning the AI race. It comes as the first of the so called Magnificent Seven release their earnings later, with investors particularly looking out for updates on Alphabet and Tesla's AI investments. And as the Journal's Roshan Fernandez writes this year, the bellwether stocks are beginning to diverge depending on just how they've leveraged the AI boom. Roshan My favorite quote from your story is that of veteran tech investor dan Ives, the MD of Wedbush securities, where he says in the Mag 7 there's the cool kids table and then there's Apple, Tesla and Alphabet there by the kitchen at the bad table wishing that they were at the cool kids table. Explain that for us.

[Roshan Fernandez]

Yeah, I mean I asked a lot of investors whether the Magnificent Seven are breaking up. Is this kind of the end? And most investors said that no, we're not quite at that point yet. They're in therapy, you know, they need a little bit of help and we're definitely trending in that direction and we're seeing a kind of divergence and a split in their performance in their business fundamentals. You're seeing Nvidia kind of breaking off and obviously performing incredibly well. You're seeing Apple and Alphabet or Google having some issues. Same with Tesla.

[Azhar Sukri]

Okay, so what is it that these companies are getting right or not in some cases?

[Roshan Fernandez]

I think that with Apple in particular, they've been having a little bit of trouble kind of wooing Investors with their AI efforts just because, you know, their AI powered Siri, their Apple intelligence service, has kind of come up short of promises. It's taken them longer than they expected to sort it out. Whereas you see companies like Nvidia and Microsoft and Meta immediately implementing that AI and being able to deliver it a little bit more directly and with a little bit more ease to users. Given that, you know, Apple selling hardware mostly, I think that that's been some of the struggle. They're just figuring out how best to package that and deliver it to the consumer.

[Azhar Sukri]

We're due to get results from Tesla and Alphabet today. What is the market expecting?

[Roshan Fernandez]

Yeah, I think investors will just be looking for updates in how much these companies have invested in AI and what kind of progress they've been making recently. Tesla obviously rolled out its robo taxi in Austin last month, and they recently said that they were going to invest in Xai, which shareholders will have to vote on later this year. So I think Tesla's making a kind of interesting pivot here, perhaps with a little bit less focus on electric vehicle sales as a whole and a little bit more focus on AI, robotics and what they can do kind of moving forward. And then Google or Alphabet will be interesting as well, just given the fact that, you know, their stock has been down a little bit this year, but it looks like they're kind of making a recovery. They've been facing, you know, antitrust issues in Europe and the us And I think investors as a whole are just thinking more broadly about what ChatGPT and some of these other chatbots will mean for Google's like, search monopoly. They'll just be looking to see how Google's kind of pivoting and what kind of progress they've been making with Gemini.

[Azhar Sukri]

Right. And Most of the Mag 7 are trading way above the S&P 500 in terms of valuations. Presumably that sets a high bar for those earnings.

[Roshan Fernandez]

Yeah, I mean, I think that earnings are going to have to be particularly impressive to continue pushing these stocks forward, just given the fact that I think as of Friday, six of those seven Mag 7 companies were trading at 25 times more than their expected earnings over the next year. And S&P 500 averages about 22. So Alphabet is the one below that bar. But just given those lofty valuations, earnings will have to be really spectacular to continue, at least in the short term, pushing these stocks sky high.

[Azhar Sukri]

That's the Wall Street Journal's Roshan Fernandez. Roshan, thank you very much.

[Roshan Fernandez]

Thank you.

[Azhar Sukri]

Coming up, we'll tell you about Donald Trump's latest political targets and its meme Stock Frenzy 2.0. But GameStop was so 2021. Find out which stocks are hot and more after the break.

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[Azhar Sukri]

President Trump has lashed out at former President Barack Obama and other Democratic leaders, including Hillary Clinton and Joe Biden, urging the Justice Department to investigate them. Speaking at the Oval Office yesterday, Trump delivered some of his harshest comments directed at his perceived political rivals during his second term.

[Roshan Fernandez]

It's time to start after what they did to me and whether it's right.

[Azhar Sukri]

Or wrong, it's time to go after people. The president's response came as he faced questions from reporters about late sex offender Jeffrey Epstein. The administration has been under pressure to release more information about the convicted paedophile. Trump said the real, quote, witch hunt that should be investigated are findings from the Director of National Intelligence who alleges she found, quote, overwhelming evidence that government officials set up what she described as a years long coup against Trump. Tulsa Gabbard said Obama administration officials had suppressed intelligence showing Russian actors didn't affect the 2016 presidential election and that she sent criminal referrals to the doj. A bipartisan Senate committee and the Central Intelligence Agency have previously concluded that Russia intended to interfere in the 2016 while the DOJ, appointed special counsel Robert Mueller found Trump and his campaign didn't coordinate or conspire with Russia to meddle with the vote. A spokesman for Obama called Trump's claims, quote, outrageous and ridiculous. We are exclusively reporting that regulators are investigating Morgan Stanley over whether the Wall street giant properly vetted its clients for money laundering risk. The probe by the Financial Industry Regulatory Authority focuses on the firm's clients risk ranking and other practices from October 2021 through September 24. It adds to the possible fines Morgan Stanley is already facing from federal investigations into its anti money laundering practices. A Morgan Stanley spokesman said the company has made substantial investments in its anti money laundering and other client vetting programs over the past several years. Now on one level, it's starting to feel like 2021 all over again. You might remember the whole meme stock frenzy back then. Well it's back. This time, though, it's companies like department store chain Coles and real estate platform Open Door Technologies that are gaining the attention of individual investors on online stock picking forums. Both stocks have rocketed higher recently. Markets reporter Caitlin McCabe says traders have found a common enemy in the professional investors who've been betting against their favorite stocks.

[Caitlin McCabe]

So in keeping with typical meme stock characteristics, we've seen some pretty eye popping performances in the stocks that are capturing investors attention right now. Kohl's finished Tuesday up 38% which was its best one day performance ever. And Opendoor, which has become another favorite, has jumped more than 30% or more in three of its last five trading sessions. Shares are up more than 400% this.

[Azhar Sukri]

Month and Caitlin says the macro backdrop provides important context on the performance of these stocks.

[Caitlin McCabe]

We have all this tariff uncertainty right now and yet US Stock indexes are at all time highs. Bitcoin is trading around $120,000 and meme stocks are just almost this natural extension of that during these periods of market exuberance. I covered retail investors for many years and I think for many of them they find it hard, hard to not get swept up when it feels like markets are just going to keep climbing higher.

[Azhar Sukri]

And that's it for what's news for this Wednesday morning. Today's show was produced by Daniel Bark and Kate Bullivant. Our supervising producer is Sandra Kilhoff. I'm Azhar Sukri for the Wall Street Journal. We'll be back tonight with a new show. Until then, thanks for listening.