Tom Cruise learns from the Samurai and comes to respect them. He joins them in the fight against the Japanese army (armed with rifles, cannons, etc). All the Samurais die except for Tom Cruise. The Emperor in the end takes the side of Cruise and doesn't sign the trade agreement with the U.S. The Emperor says that it's important for the people of Japan to not forget who they are, their customs, etc. The British guy has plenty of material for a book on the samurai that he wants to write (Tom Cruise's diary/journal and other stuff). Tom Cruise goes off and lives in the samurai town.
Trivia: In scene 32, Katsumoto and Algren ride through the line of troops and as Algren dismounts, his horse kicks out at the soldier to the right of the camera and hits him in the groin. The soldier bends over with the impact, backs up, then bravely straightens up again as the scene continues. (01:53:55)
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