Donald Trump has announced a “massive” trade deal with Japan that would earn the US economy $550 billion (£407 billion) in investment.

The agreement, with one of the US’s largest trading partners, would lower tariffs for Japan and is the most significant of a string of trade deals the White House has negotiated before Mr Trump’s tariffs are due to kick on August 1.

Under the plan, the US president said Japan will pay a 15 per cent tariff on goods imported to the US – down from 25 per cent – and open its markets to American goods, including cars and rice.

“This is a very exciting time for the United States of America, and especially for the fact that we will continue to always have a great relationship with the Country of Japan,” Mr Trump said on his Truth Social platform.

The deal also lowers the tariff to 15 per cent from 25 per cent on Japanese cars, which account for more than a quarter of all the country’s exports to the US.

The announcement ignited a rally in Japanese stocks, with the benchmark Nikkei climbing 2.6 per cent to its highest in a year. 

Shares of carmarkers surged in particular, with Toyota up more than 11 per cent, and Honda and Nissan both up more than 8 per cent.

‘Mission complete’

However, US automakers signalled discontent with the deal, raising concerns about a trade regime that could cut tariffs on auto imports from Japan while leaving tariffs on imports from Canada and Mexico at 25 per cent.

The White House did not immediately respond to a request for additional details about the deal.