Analysts at Bank of America said that the Japan deal "looks like a reasonable blueprint" for other auto-exporting countries like South Korea.

President Donald Trump announced a trade agreement with Japan on Tuesday, making it the largest U.S. trade partner to broker an accord as the White House threatens to impose tariffs on dozens of countries within days.

Trump's trade deals with the EU and Japan pave the way for the stock market to end with it's third straight annual gain of more than 20%, Oppenheimer said.

The 15% tariff would be lower than previously threatened, but it would remain a high duty on America’s largest trading partner.

"The biggest piece in the trade deal puzzle still remains, and the Chinese are unlikely to be as willing to fold."

Japan’s surprise trade deal with the US sent its markets on a wild ride, pushing stocks to all-time highs and fueling a selloff in government bonds.