Japan Resists Pressure Ahead of US Tariff Talks, Warns of Economic Risks

GDP

JAPAN: Japan has signaled it will not make major concessions or rush into a deal as it prepares for upcoming tariff negotiations with the United States, despite facing significant pressure from US-imposed tariffs. Currently, Japan is subject to a 10% universal rate and a 25% tariff specifically on car exports, which make up approximately 28% of its exports to the US—its largest export destination. While these duties have been temporarily paused for 90 days, they remain a key concern. Trade talks are set to begin Thursday in Washington and will address tariffs, non-tariff barriers, and exchange rates. Japanese officials emphasized understanding both the logical and emotional reasoning behind US trade demands, while ruling out retaliatory tariffs on US goods.

Economic risks tied to US tariffs have sparked warnings from Japan's central bank, with officials noting the potential global disruptions. Amid US accusations of Japan maintaining a weak yen, the country may also face pressure to strengthen its currency, even as the yen has recently appreciated due to a broad dollar sell-off. Discussions on currency issues will be handled between the respective finance ministers. The Bank of Japan's slow pace in raising interest rates could come under scrutiny, with analysts suggesting monetary policy could shift based on yen fluctuations. Meanwhile, domestic lawmakers are calling for tax cuts or cash payouts to offset rising living costs and tariff impacts, though the government has yet to announce a supplementary budget.

Source: Bank of Japan