The United States has reached a sweeping trade agreement with Japan that will see the Asian powerhouse invest $550 billion into the American economy and open its markets to a wide range of US goods, President Donald Trump announced on Tuesday evening.

Trump, speaking during an event at the White House, described the pact as the "largest trade deal in history" and said it was the result of prolonged and detailed negotiations.

"They had their top people here, and we worked on it long and hard. And it's a great deal for everybody. I always say it has to be great for everybody. It's a great deal," he said.

According to Trump, the agreement includes a 15 percent reciprocal tariff on Japanese goods and increased access to Japan’s market for US products such as cars, trucks, rice, and other agricultural exports.

The announcement followed weeks of high-level talks and came against the backdrop of earlier threats by Trump to impose a 25 percent tariff on Japanese exports if no agreement was reached before 1 August.

That proposed rate was a percentage point higher than the 24 percent tariff announced in April during what Trump dubbed “Liberation Day”.

Following the April declaration, the tariff plan was suspended for 90 days in response to global market disruptions, giving Japan's trade team time to engage Washington in talks.

Japan's chief trade negotiator Ryosei Akazawa confirmed the meeting at the White House in a Facebook post, using the hashtag “Mission accomplished.”

Japan's Prime Minister Shigeru Ishiba was more reserved in his reaction, telling reporters on Wednesday, "As for what to make of the outcome of the negotiations, I am not able to discuss it until after we carefully examine the details of the negotiations and the agreement."

The trade deal was met with optimism in financial markets. The Nikkei 225 rose by about 2 percent in Tokyo on Wednesday morning, and shares of major car manufacturers, including Toyota, Nissan and Honda, climbed sharply after broadcaster NHK reported that tariffs on Japanese cars exported to the US would be lowered.

Meanwhile, Trump signaled that this was only the beginning of a broader effort to secure favorable trade terms, revealing that a deal with the European Union would be unveiled the next day, with further agreements expected to follow.

The announcement also comes at a politically sensitive time for Japan’s Prime Minister, who is facing calls to resign following his Liberal Democratic Party’s loss of majority in the upper house during the weekend's elections.

The party had previously lost its grip on the more powerful lower house last year.