The agreement - including a 15 per cent tariff on all imported Japanese goods, down from a proposed 25 per cent - is the most significant of the string of trade deals the White House has reached ahead of an approaching August 1 deadline for higher levies to kick in.
In a post on Truth Social, Trump added that Japan will open to trade for cars, trucks, rice and certain agricultural products, among other items.
"I just signed the largest TRADE DEAL in history with Japan," Trump said.
"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," he said.
Japanese Prime Minister Shigeru Ishiba, who is facing political pressure after a bruising election defeat on Sunday, hailed the deal as "the lowest figure among countries that have a trade surplus with the US".
The two sides also agreed to cut tariff 25 per cent tariffs already imposed on Japanese autos to 15 per cent, Ishiba said. Auto exports account for more than a quarter of Japan'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 automakers surged in particular, with Toyota up more than 11 per cent, and Honda and Nissan both up more than eight per cent.
The exuberance extended to shares of South Korean carmakers as well, as the Japan deal stoked optimism that South Korea could strike a comparable deal. The yen firmed slightly against the dollar, and US equity index futures edged upward.
But US automakers signalled their unhappiness with the deal, raising concerns about a trade regime that could cut tariffs on auto imports from Japan to 15 per cent while leaving tariffs on imports from Canada and Mexico at 25 per cent.
Matt Blunt, who heads the American Automotive Policy Council which represents General Motors Ford and Chrysler-parent Stellantis, said "any deal that charges a lower tariff for Japanese imports with virtually no US content than the tariff imposed on North American-built vehicles with high US content is a bad deal for US industry and US auto workers".
Autos are a huge part of US-Japan trade, but almost all of it is one way to the US from Japan, a fact that has long irked Trump.
In 2024, the US imported more than $US55 billion ($A84 billion) of vehicles and automotive parts while just over $US2 billion ($A3.1 billion) were sold into the Japanese market from the US
Two-way trade between the two countries totaled nearly $US230 billion ($A352 billion) in 2024, with Japan running a trade surplus of nearly $US70 billion ($A107 billion). Japan is the fifth-largest US trading partner in goods, US Census Bureau data show.
