The U.S. and Japan have reached a trade agreement that will lower tariff rates on the longtime U.S. ally down to 15%, President Donald Trump said Tuesday. The 25% tariff rate slated to hit Japan by August will be lowered to 15%, according to Trump, who said Japan will invest $550 billion into the U.S. under the deal.

Global shares have rallied, with Tokyo's benchmark Nikkei 225 index finishing 3.5% higher after Japan and the U.S. announced a deal on President Donald Trump's tariffs.

The agreement will impose tariffs of 15 percent on Japanese goods, down from a threatened 25 percent. Trump said Japan would also invest $550 billion in the U.S.