U.S. President Donald Trump's substantially higher tariffs, including those on all car imports, are set to slow export-oriented Japan's annual economic expansion by up to around 2 percent in the coming years, analysts warned.
Concerns are mounting that Asia's second-biggest economy, which has already been sluggish due in part to sharp inflation, could slip into recession if a downturn in exports stemming from U.S. tariff hikes weighs on corporate performance and hinders wage growth.
Takahide Kiuchi, executive economist at the Nomura Research Institute, estimates that the U.S. tariffs could push down Japan's gross domestic product by over 0.7 percent over roughly a year, urging vigilance against a possible recession.
Daiwa Institute of Research said Thursday that the reciprocal tariffs announced by the United States are projected to drag down Japan's inflation-adjusted GDP by about 1.8 percent in 2029, the year Trump is scheduled to leave the White House.
Trump, who started his nonconsecutive second term on Jan. 20, imposed 25 percent tariffs on all steel and aluminum imports in March and began applying an additional 25 percent levy on all automobiles produced outside the United States.
On Wednesday, Trump said he will slap a minimum 10 percent reciprocal tariff on all exports to the United States and further duties on Japan, home to Toyota Motor Corp and Honda Motor Co, and other selected countries, which face higher rates.
Trump's car tariffs would have a particularly huge impact on Japan, as the auto industry, its core business, has been a major driver of the broader economy. The United States remains the top market for Japan's carmakers working with many subcontractors at home.
More than 1.3 million vehicles were shipped to the United States in 2024, the Japanese government said. The volume accounted for 28.3 percent of Japan's total exports, the highest share among all items to the world's largest economy.
Business confidence among major Japanese manufacturers, however, deteriorated in March for the first time in a year, the Bank of Japan's quarterly Tankan survey showed earlier this month, as Trump's tariffs have blurred the outlook for the global economy.
The heavier tariffs by the United States come at a time when Japan is at a juncture where the pace of wage growth could outpace that of price hikes -- a goal sought by the government and the central bank, which have strived to combat decades-long deflation.
Last year, domestic companies agreed to wage increases averaging 5.28 percent at annual negotiations with labor unions, marking the sharpest gain in more than 30 years, while Japan's core consumer prices rose 3.1 percent in 2023, the fastest climb in 41 years.
In the latest shunto spring talks, firms offered average pay raises that reached 5.42 percent above the previous year's level, according to the Japanese Trade Union Confederation's interim survey, indicating a second straight yearly rise exceeding 5 percent.
The BOJ, meanwhile, has expressed eagerness to continue tightening its monetary policy to prevent inflation from hurting the economy. In January, the bank lifted short-term interest rates to 0.5 percent, the highest level seen in 17 years, from about 0.25 percent.
Nevertheless, economists said achieving wage growth that can surpass inflation remains challenging, as many companies, affected by the upturn in global raw material prices and the yen's depreciation, cannot afford to spend on human resources.
In addition, the Japanese government hopes that wage expansion will spread to small and medium-sized firms, which employ around 70 percent of the nation's workforce, but the U.S. tariffs and their side effects could pour cold water on the trend, they added.
Shinichiro Kobayashi, principal economist at Mitsubishi UFJ Research and Consulting, said that escalating trade frictions triggered by the U.S. tariffs could hamper business activities across the board, describing it as the "worst-case scenario."
"If the world economy decelerates, Japan's exports would decline, with repercussions for the domestic economy," such as reductions in capital spending, another key component of GDP, Kobayashi said.
Japan's GDP expanded an annualized real 2.2 percent in the October-December quarter, posting a third consecutive quarter of growth. An economy is technically considered in a recession if it contracts for two straight quarters.
© KYODO
46 Comments
buchailldana
The orange moron in chief probably thinks it's " great television"
Lights a bomb then goes off and plays golf.
Why no tariffs on Russia/ Saudi Arabia??
JeffLee
I guess that assumes that Japan doesn't respond to the tariffs by not buying more US goods. The biggest US exports to japan in order are minerals/fuels, pharmaceuticals, machinery, medical and optical equipment, aerospace components, electronic goods, etc.
Buying more of those would boost Japan's GDP and also ease its labor shortage, as many of the Japanese industries above are short of Japanese workers, with the shortfall often made by Vietnamese and Indonesians! Seems like a win-win for Japan.
Jay
Kyodo News, the ‘trusted’ source that now delivers its reports via a cartoon anime character. Nothing says serious journalism like getting economic analysis from what looks like a weeb's waifu.
Maybe instead of panicking over Trump’s tariffs, they should focus on why their news agency is presenting itself like a Saturday morning children's show. Hard to take them seriously - assuming anyone ever did.
deanzaZZR
Queue the famous Kissinger quote ...
I'veSeenFootage
But but but all the MAGA experts told us the tariffs were great for Japan business too!
BB
We could well see something like stagflation in the U.S. as growth slows and prices rise. Combine that with the tariffs and it's going to be grim for Japan's exporters and all the small companies that supply them.
dbsaiya
A key tenet of dialectics is that contradictions and external pressures can drive the emergence of something new. It's time for automakers to pivot, leveraging their expertise and technology to enter new industries and markets. Follow the path of Fujifilm or risk fading like Kodak.
Toshihiro
If Trump wasn't disliked enough for pulling what he did in the past months, he will surely get the ire of more countries now. America's allies are probably cringing hard and grinning with grinded teeth if they ever have to meet with this guy in the future. Nobody benefits from this, why do it? He's just accelerating the decline of the global economy.
upintheair
Nothing that more tourism can’t fix. Just shut down the factories and convert them to the tourism industry. Isn’t tourism generating already more than ca r export?
stormcrow
Bonehead Economics
There is a right way and a wrong way and this is the wrong way.
Well, at least they can’t blame Biden for this, even though they will try if this ends up in utter failure.
Wasabi
Trump imposes tariffs on uninhabited islands
So much professionalism, so many win. Are you tired yet of so many win? Do you feel great now?
OssanAmerica
No.
2024 revenue from inbound tourism............JY 8.1 trillion.
2024 revenue from auto exports...................JY 18.5 trillion.
grc
Given that growth last year was only 0.1%, two percent lower than that well be recession. I checked on my calculator.
WoodyLee
For years employers ROBBED their employees and stole their benefits and savings, and that's why wages are so damn low.
If wages kept pace with inflation or surpass it we would have never had a problem, now that wages are beginning to catch up inflation takes off like a rocket putting consumer back in the $hit hole.
GREED IS DEADLY.
lincolnman
And they will push down the US's economic growth by even more...10%? 20%?
Welcome to Trump-flation and the Trump-Recession...
And for all those that got suckered into voting for him - Trump-poverty...
Redtail Swift
Tell me Japan, do you still love him? Strong imbalanced dollar + additional tariffs!
I want to hear if you still praise him!
Tokyo Guy
All we need to know is that Fox "news" has removed its stock market ticker from the screen for the first time in 28 years. If that's not meaningful to MAGA and their many, many cousin Mary-Lou-Beths, I don't know what will convince them.
WoodyLee
""Last year, domestic companies agreed to wage increases averaging 5.28 percent at annual negotiations with labor unions, marking the sharpest gain in more than 30 years, while Japan's core consumer prices rose 3.1 percent in 2023, the fastest climb in 41 years.""
" in more than 30 years "
" the fastest climb in 41 years"
How SAD.
quercetum
Cringe Quote
Henry Kissinger once said, “It may be dangerous to be America's enemy but to be America’s friend is fatal.
Just ask Ukraine.
Henry Kissinger also said “America has no permanent friends or enemies, only interests”.
Ask Russia.
CaptDingleheimer
Then maybe it's time to cut the crap and buy some Fords.
NZ
may do.may do not.
lets wait some months say half year to see impact.
now its too early for it.
I'veSeenFootage
As childish as it is, an anime character newscaster is actually maybe exactly what a cartoonishly dumb and evil president calls for.
funkymofo
trump's tariff idiocy has tanked the stock market to Covid levels. He is the economic equivalent of a pandemic that killed millions.
antibotter
@Toshihiro
Because his owners benefit from it. They are the only ones who benefit from a weakened rest-of-the-modern-world.
ruzzia, the answer is ruzzia and putler.
Should be clear to everyone.
I'veSeenFootage
The ultimate goal is to get rid of the income tax altogether and to compensate the tax loss with huge tariffs.
Basically, making the vulgum pecus pay exorbitant prices for everything (claiming they are richer because they don't pay income tax anymore), while the 1% enjoys even more immoral wealth.
isabelle
The tariffs don't distinguish between friend and foe, so the Kissinger quote seems rather irrelevant.
Whether friend, foe, or anything else, Trump's insanity affects everyone alike.
deanzaZZR
Me, and my shadow.
The quote most certainly does apply to faithful friends of the USA like Japan and Australia, for example.
kohakuebisu
Given that Europe is scrapping diesels and has turned on Tesla, I would think it is prime time for Japan to sell them lots of hybrids. Hybrids have never sold well in Europe, because the eco-cars they all bought were diesels, which were faking their way past emissions tests, probably with tacit knowledge from the EU. It was the EPA in the US who discovered the fraud.
Japan should forget about the US and cozy up to Europe. With European economies struggling and now having to up defence spending, I cannot see any big spend on a government driven rollout of EV charging. Especially with right wing populists getting ever louder.
commanteer
Considering Japan is the only major economy that has seen its GDP shrink over 20 years (while almost every other major economy saw their GDPs double or triple), I'd say this is small potatoes. Maybe this will even spur the government to get their act together.
u_s__reamer
Sorry, but you can't run a country like a scummy real-estate outfit. After the damage done, consigliere, Musk, will be gone (fired? deported?) leaving Trump to lead his lemmings over the cliff. Europe, stand by and stand back!
Tell_me_bout_it
Ironic how Japan is getting kicked at the back after so many years kissing US's arse. Japan does anything but actually caring about its own workforce.
Even now they are sacrificing the wellbeing of locals for the sake of tourism. Prices record inflated, locals barely surviving with minimin wages. We can barely travel abroad. Now more recession is expected due to tariffs. We cant catch a break.
All while tourists enjoying weak yen, filling subways, littering streets.
Chief -Tariffs
"Trump tariffs may push down Japan's economic growth by up to about 2%."
If you really know this gonna happen, then why wait? Just remove the trade barriers that exists and let consumers decides what they need or want as per the various choices in the market. For lack of better words, if you know it's gonna rain then better have an umbrella. Don't wait for the rain and then complain how wet and cold you are!!
Hamilton
It's critical to see the big picture regarding tariffs- the hardest hit are all based in Asia. The big plan is to shift clothing production to Latin America, which currently has a favored tariff status and regionally pays low wages-which ensures high profits for companies and their retail partners,. Also they plan to use more robotics at businesses which shift to being US based, rather than employ people with all their pesky living wage demands, need for health care and some time off. There won't be great paying jobs for Americans like he's promising. Few to none will get such a job for making goods no one will buy because they can't afford it, or value fair labor enough to want to pay it. Average Americans want things cheap, and for 3 decades they've been weened on plastic crap sold by Republican owned businesses that outsourced labor to keep profits high. The poster child of who started that was WalMart, who also brow beat their own US based vendors into lowering their minimum prices, and threatened to cut them off if they didn't. Thus a billionaire small family empire was born. Republican Gov Mitt Romney was at Bain & Co hedge fund who got rich advising US businesses how to leave the US for cheap labor and outsource manufacturing. Tsk tsk.
Curious too Trump and his daughter Ivanka always used Chinese made goods when selling Trump Org branded merch.. as well as employing and exploiting undocumented workers at his luxury resorts and golf clubs. So much for MAGA and support for Made in the USA.
There's an old expression pointing out hypocrisy: "do as I say, not as I do" to always think of when Trump talks about business. Even 2 of his 3 wives weren't American.
Consider too, Trump, his daughter Ivanka and her husband (Trumps son in law) Jared Kushner love doing business with Asians when it's good for their own business. Funny how Trump made Make America Great Again his 2015 campaign slogan (imitating others who came before) while the ICBC China bank had an entire floor HQ at Trump Tower in NYC until 2016, when the media learned of it they asked about it when he became President. He tried denying it and the bank just moved a block away to make it look slightly less obvious.
Kushner is a Trump mini-me, who loves selling overpriced, sad, fake luxury poor quality condos in downtown and Journal Jsq Jersey City NJ to the Chinese if they're willing to overpay for a EB-5 Visa, which became a scandal they couldn't deny or hide from. The development approvals were denied, until Covid lockdown began in 2020 and while citizens were distracted the city council granted Kushners building approval. Even if the venture had failed he could write it off as a (pass through) tax loss to avoid paying taxes thanks to Trump writing special laws to favor speculative developers.
Kushner has crime in his DNA (just like his dad Charles) and when young hatched the plan to lure rich Chinese people back in 2012, and bait them by co founding Yue magazine in NYC. Similarly his other long term plan was using his young children to charm Chinese businessmen by showing off how his kids spoke some mandarin. Today he spends more time kissing the rump of MBS so maybe he and the kids should've learned Arabic as well.. and hey nothing wrong with being bilingual, but it's wise to lay off the MAGA nationalist America First right wing hype when you don't even pretend to follow it even a little.
Just some nuggets of truth to remember when you hear about 'tariffs' and 'MAGA'.
kohakuebisu
It's also the only one who's working age population has shrunk. Its going down close to one million people a year.
GDP growth per member of the working age population has essentially matched other G7 countries, about 1.5% a year, since 2008. Your GDP will not grow by having lots of old people.
Wage growth has been anemic, so I am not saying everything is rosy.
bass4funk
The problem is, most liberals do not fully understand or can grasp how an economy works, also they think that America should just continue the status quo of being taken advantage of.
Chief -Tariffs
For so long people in developed nation or fast lane nation have seen their manufacturing jobs taken overseas. Only for those goods manufactured cheaply to be imported back Tax free. For a long time the only benefactors of this globalized system were the big corporations while the common man/ woman was left helpless or on welfare. This happened in the US, Japan among others. And to make it worse, this system created ghost towns every where. It's time for US, Japan and the rest for a reset and remove all trade barriers which will provide their citizens with more choices in terms of product, services and jobs.
Chief -Tariffs
Bass4funk,
"The problem is, most liberals do not fully understand or can grasp how an economy works, also they think that America should just continue the status quo of being taken advantage of."
Please, allow me for lack of better words to say this.
The era of political prostitution and economic whoredom ended on January, 20 2025. Reset is required not only in US but also in Japan. These two nations were the first to ship manufacturing abroad and evident with various ghost towns in both nations
Derek Grebe
$2.5 TRILLION wiped off the stock market yesterday.
Now can you Magtards see how your painted buffoon bankrupted casinos?
rainyday
The problem is, the president of the United States does not fully understand or is able to grasp how an economy works.
XCAndtheband
Trump and MAGA seriously think they can run a protection racket.
“Hey buy our stuff or else I’m gonna blow up your house.”
That’s not fixing any imbalances in the market, that’s just extortion.
And as usual, MAGA wants to pretend that it’s some sort of genius strategy. It’s the oldest strategy in the book and it ain’t genius. But as usual, Trump only knows how to be a criminal.
The funny thing is, the thing they love the most, the market, is telling them “hey, no one wants your stuff” and they throw a tantrum about it and instead of changing strategy and making things people actually want, they just hold everyone hostage and demand that everyone buys it. Like Republicans on tv saying that Asians should buy American rice. Are you joking? No Asian wants to buy American rice. Smarten up, MAGA.
Wasabi
That show the level of professionalism form trump. Is that really what the American wants to lead them?
That added to the use of Gmail and tasting war plan to a journalist.
The_Beagle
After the devastation of WWII, the United States promised to help rebuild Europe and Japan, by opening our previously protected markets to foreign goods, keeping our tariffs low to nonexistent, providing the world’s reserve currency, and underwriting global security with American military power.
In return, other countries were supposed to gradually liberalize their economies, buy American goods, and play by the rules. But they never did.
Instead, they took our postwar deal —designed to help them— and ran with it. They piled up tariffs, non-tariff barriers, VAT taxes, and trade cheats while the U.S. kept its markets wide open.
For decades, the American working class footed the bill while foreign economies fattened themselves, and American elites made billions facilitating and perpetuating the grift. That was globalism. It’s not an ideology— it is a business model. And Trump just crushed the model.
Chabbawanga
The US hasn’t been taken advantage of, it has strategically borrowed from other nations, and that borrowing has helped fuel its economic dominance. In return, it has given favourable trade terms, and the US dollar remains the cornerstone of global trade. Despite the Feds money printer going into overdrive, foreign nations continue to trade in dollars and buy US bonds because, for now, there are few viable alternatives.
wallace
It was America that destroyed its manufacturing industry. No one else.
JapanJim
Japan complains about rice shortage and costs, yet has a 700% tariff on American rice imports.
elephant200
This is a stab in the back for Japan for being a good dog for decades. When it comes to money , nobody us your friends !