Toyota leads gains in the auto sector after the U.S. and Japan work out a trade deal

Toyota Motor (NYSE:TM) surged more than 12% in premarket trading on Wednesday as investors gauged the Japanese auto stock as a big winner of the new trade deal stuck between the U.S. and Japan.

The U.S. will impose a 15% tariff on Japanese goods entering the country, which is a reduction from the previously threatened 25% tariff that was set to take effect on August 1. The agreement also includes greater Japanese imports of American rice and several agricultural commodities.

Japanese Prime Minister Shigeru Ishiba confirmed that U.S. auto tariffs on Japanese vehicles will be reduced from 25% to 15%. For investors, the deal helps reduce tariff-related uncertainty looking ahead to the back half of 2025 and 2026.

Other auto stock gainers included Honda Motor (NYSE:HMC) with a 10.5% rally, Stellantis (STLA) with a 5.9% gain, and General Motors (GM) with a 2.1% gain. Nissan (OTCPK:NSANY) jumped 8.3% in Tokyo trading following the deal announcement. On a year-to-date basis, Chinese automakers XPeng (XPEV) +61%, Li Auto (LI) +29%, and NIO (NIO) +18% have some of the strongest gains in the sector amid the trade war anxiety.