UPSC Prelims Practice Questions — Trump unveils first Japan investments post trade pact
Q1. Under the US–Japan Trade and Investment Agreement (July 2025), which one of the following US federal departments has been publicly designated as the lead agency operationalising the selection and roll-out of projects funded by Japan's $550 billion investment pledge?
- A. Office of the United States Trade Representative (USTR)
- B. Department of the Treasury
- C. Department of Commerce
- D. Department of State
Q2. In the context of the Trump administration's 2025 trade policy (including the July 2025 US–Japan agreement), the term 'reciprocal tariff' is best defined as:
- A. A tariff set to mirror the duty or non-tariff barrier rate that the partner country imposes on comparable US exports
- B. A uniform tariff levied at the same rate on imports from all trading partners under the Most-Favoured-Nation principle
- C. A tariff imposed exclusively in retaliation for proven currency manipulation by a trading partner
- D. A duty levied to offset subsidies granted by a foreign government to its exporters
Q3. With reference to the July 2025 US–Japan Trade and Investment Agreement compared to its US bilateral predecessors and the prior tariff threat, consider the following statements:
1. The 15% baseline tariff on Japanese imports replaced a threatened higher 'reciprocal' tariff rate of around 25%.
2. The framework of capping tariffs at 15% in exchange for a large directed investment fund had earlier been applied by the United States in bilateral deals with the United Kingdom and the European Union.
3. Under the agreement, the United States is entitled to receive 90% of the profits arising from Japan's $550 billion investment pledge.
Which of the statements given above is/are correct?
- The 15% baseline tariff on Japanese imports replaced a threatened higher 'reciprocal' tariff rate of around 25%.
- The framework of capping tariffs at 15% in exchange for a large directed investment fund had earlier been applied by the United States in bilateral deals with the United Kingdom and the European Union.
- Under the agreement, the United States is entitled to receive 90% of the profits arising from Japan's $550 billion investment pledge.
- A. 1 and 2 only
- B. 1 and 3 only
- C. 2 and 3 only
- D. 1, 2 and 3
Q4. Consider the following sectors said to be covered by the first tranche (~$36 billion) of projects announced in February 2026 under Japan's $550 billion investment pledge to the United States:
1. Natural gas-fired electricity generation
2. Crude oil export terminal infrastructure
3. Synthetic / industrial diamonds manufacturing
4. Advanced semiconductor wafer fabrication
Which of the above is/are NOT correctly identified as being part of the first tranche?
- Natural gas-fired electricity generation
- Crude oil export terminal infrastructure
- Synthetic / industrial diamonds manufacturing
- Advanced semiconductor wafer fabrication
- A. 4 only
- B. 1 and 4 only
- C. 3 and 4 only
- D. 2 only
Q5. With reference to the first tranche of projects unveiled in February 2026 under the US–Japan Trade and Investment Agreement, consider the following State–project pairings in the United States:
1. Ohio – a large natural gas-fired power plant operated by SB Energy, a SoftBank Group subsidiary
2. Texas – a crude oil export terminal
3. Georgia – an industrial (synthetic) diamonds manufacturing plant
4. Pennsylvania – a rare-earth elements refining complex
Which of the above is/are correctly identified?
- Ohio – a large natural gas-fired power plant operated by SB Energy, a SoftBank Group subsidiary
- Texas – a crude oil export terminal
- Georgia – an industrial (synthetic) diamonds manufacturing plant
- Pennsylvania – a rare-earth elements refining complex
- A. 1 and 2 only
- B. 1, 2 and 3 only
- C. 2, 3 and 4 only
- D. 1, 2, 3 and 4