Trump Just Announced A Trade Deal With Japan. Why This Automotive Stock Is Rallying

Shares of Toyota Motor Corp (NYSE:TM) are surging Wednesday morning after Washington and Tokyo finalized a long-anticipated trade agreement. The deal, which alleviates tariff uncertainty for Japanese automakers, sent the entire sector soaring.

What To Know: The news propelled Japan's Nikkei 225 Index up 3.1%, with auto stocks leading the charge. Mazda Motor Corp skyrocketed nearly 17%, while Mitsubishi Motors Corp also posted strong gains.

President Donald Trump announced the $550 billion deal, which includes Japan opening its markets to American agricultural products and vehicles. A key provision establishes a 15% tariff on American imports from Japan, a figure providing automakers with a clear cost structure after months of tense negotiations and threats of higher duties.

According to Spencer Hakimian of Tolou Capital Management, the 15% tariff is paradoxically advantageous for companies like Toyota. He noted that American automakers still face a complex web of tariffs on raw materials like steel and copper, as well as on vehicles and parts from Canada and Mexico.

"Toyota only has to pay 15% more and they're done with all the shenanigans," Hakimian stated. He suggests the deal gives Japanese automakers a competitive edge by simplifying their tariff obligations, even as it aims to bolster American manufacturing.

Benzinga Edge Rankings: According to Benzinga Edge stock rankings, Toyota showcases exceptional fundamentals despite its recent price performance. The automaker scores remarkably high on key long-term metrics, boasting a Value score of 98.78 and a Quality score of 97.64.

This combination suggests the stock is considered significantly undervalued while maintaining strong financial health. Its Growth score is also robust at 87.22, indicating solid growth prospects.

In contrast, its Momentum score lags at a low 24.66, reflecting that the stock’s price had been underperforming the broader market prior to Wednesday’s trade-deal-driven rally.

Price Action: According to data from Benzinga Pro, TM shares are trading 13.1% to $192.23 Wednesday morning. The stock has a 52-week high of $201.00 and a 52-week low of $155.00.

Read Also: BMW, Volkswagen, Stellantis Rally As Trump’s Japan Trade Pact Fuels Hopes For EU Deal — But Analysts Warn It’s ‘Impossible To Predict’

How To Buy TM Stock

By now you're likely curious about how to participate in the market for Toyota Motor – be it to purchase shares, or even attempt to bet against the company.

Buying shares is typically done through a brokerage account. You can find a list of possible trading platforms here. Many will allow you to buy “fractional shares,” which allows you to own portions of stock without buying an entire share.

If you're looking to bet against a company, the process is more complex. You'll need access to an options trading platform, or a broker who will allow you to “go short” a share of stock by lending you the shares to sell. The process of shorting a stock can be found at this resource. Otherwise, if your broker allows you to trade options, you can either buy a put option, or sell a call option at a strike price above where shares are currently trading – either way it allows you to profit off of the share price decline.

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