Impact of Tariffs on Japan‘s Economy

As U.S. President Donald Trump promotes bilateral negotiations over its tariff policy, it is undeniable that Trump’s tariffs already have certain negative impacts on economy of Japan. Some business sectors already realize loss of profit and growth of Japan’s economy is predicted to slowdown. Shigeru Ishiba administration is not sure that Japan, as a close ally of the United States, can enjoy some exception in levying tariffs through negotiation. 

Toyota Motor Corporation published FY2025 consolidated financial results on May 8. According to its estimation, net income from April 2025 to March 2026 will decline by 3.1 trillion yen (21 billion dollar, 34.9 percent). Toyota already took into account declines of 180 billion yen in April and May 2025 as the impact of Trump’s tariff policy, and annual 745 billion yen of decline caused by fluctuation of foreign exchange.

 

Nippon Steel estimates its net income between April 2025 and March 2026 to be 200 billion yen, decline by 42.9 percent from previous fiscal year. “The U.S. administration’s tariff policy is becoming increasingly uncertain day by day and is beginning to have a major impact on the global economy. As a result, the trend toward favoring domestic production is accelerating, and it is expected to have a significant impact on the domestic and overseas steel industry, including an indirect impact,” says Nippon Steel’s consolidated financial results for FY2024.

 

The Bank of Japan has revised its estimation on growth of Japan’s economy in FY2025. “Japan’s economic growth is likely to moderate, as trade and other policies in each jurisdiction lead to a slowdown in overseas economies and to a decline in domestic corporate profits and other factors,” says the bank’s Outlook for Economic Activity and Prices in April. The outlook raises evolving situation of trade and developments in import prices as risks to economic activity.

 

Concerns on foreign exchange also grows. Refusing pressure to ease its monetary policy from Trump administration, however, the Federal Reserve Bureau maintained its interest rate in the Federal Open Market Committee in May, which may cause depreciation of Japanese yen against U.S. dollar as long as interest gap between the U.S. and Japan is not narrowed. Japanese yen further declined when U.S. reached a deal with China over tariffs.

 

Cheap yen causes price hike of imported goods in Japan. According to Monthly Labour Survey in March by Ministry of Health, Labour and Welfare, real wage of workers in Japan dropped for three consecutive months. Workers’ wage has still not catch up with price inflation. 

 

To minimize the impact of Trump’s tariffs on coming Upper House election, Ishiba administration is going to deliver economic stimulus package. However, the leaders of ruling Liberal Democratic Party are reluctant to introduce consumption tax cut or cash distribution in the campaign platform. The latest poll of NHK showed 33 percent of approval rate, declining by 2 percentage points from the previous month.

Comments

Post a Comment

Popular posts from this blog

Amendment of Local Autonomy Law

The House of Representatives started discussion on revision of the Local Autonomy Law, which would vest the national government a power to instruct local government in an emergency. It may change the relationship between the national and local government, which has been recognized as equal. The opposition parties oppose the amendment, arguing that it would give the national government an excessive power.   With the Meiji Restoration, the national government abolished the feudal system, introducing modern governance. However, its autonomy was not sufficient. The governor of each prefecture was appointed by the national government. The local governments subordinated to the national government. It was as late as 2000 when  the Comprehensive Decentralization Law  was enacted and the relationship between the national and local government was defined as equal.   The national government found inconvenience in the relationship between the national and local government, when ...
Read more

Request for Final Nuclear Disposal Site

Ministry of Economy, Trade and Industry requested Genkai Town, Saga, to accept “literature survey” for building a final disposal site for high-level radioactive waste. Genkai is going to answer within this month. If it accepts, it will be the third place to accept that survey, following two places in Hokkaido. Main reason to accept the survey is supposed to be subsidy from the national government.   Japan has no final disposal site. Among all 54 reactors in 17 nuclear power generation plant, 12 reactors of 6 plants are operating. The rest of them are not in operation, some of which are determined to be decommissioned. Used nuclear fuels are stocked in each plant, 　 or have sent to a reprocessing plant in Rokkasho, Aomori. There are two plans to stock nuclear wastes in the intermediate facility for disposal, one is already built and another is still in negotiation.   Nuclear Fuel Final Disposal Act in 2000 determines to bury nuclear waste in the underground. Literature survey, ...
Read more

Death Penalty Demanded on Criminal of Arson

On the historically brutal case of arson, the public prosecutors demanded an ultimate penalty to the offender. In the trial on the arson and murder in Kyoto Animation in 2019, the prosecutors requested death penalty on the defendant, Shinji Aoba. The lawyers of Aoba argued that the court should avoid sentencing death penalty. The judgement will be passed next January. Aoba was indicted as putting fire after pouring gasoline in the building of Kyoto Animation (Kyoani), a studio producing animation works, and killed 36 staffs and injured 32 on July 18 th , 2019. In the trial, Aoba argued that he could not tolerate Kyoani, because it had stolen his novel story in its works. Aoba later apologized to the victim’s families that he had done too much and regretted it.   In the closing argument in Kyoto Regional Court, the prosecutors demanded death penalty for Aoba, because the number of victims were extremely high in the history of criminal trials in Japan. “It is hard to describe about h...
Read more