Japan’s Economy Suffers as Trump’s Trade War Wreaks Havoc on Exports and Confidence
TOKYO (AP) — According to data released Friday by the government, Japan’s economy shrank at an annualized pace of 0.7% in the January-to-March period, coinciding with developments related to the U.S. President.
Donald Trump’s trade war
injured exports and damaged consumer trust.
Japan’s actual gross domestic product, which gauges a country’s production and provision of goods and services, experienced an unexpected decline of 0.2% from the prior quarter during January through March, marking the first decrease in twelve months. This information comes from the Cabinet Office’s seasonally adjusted initial report.
The exports decreased at an annualized pace of 2.3%, consumer spending stayed steady, whereas capital investments increased by 5.8%.
Trump’s tariffs are likely to hurt
Japan’s big exporting companies, particularly those in the automotive sector
, not just for items shipped from Japan, but also from other countries such as Mexico and Canada. Authorities admit that devising a plan is difficult due to President Trump frequently altering his stance.
“According to an S&P Global Ratings report, regional car manufacturers encounter higher operational expenses and possible drops in income as their American sales hinge on varied manufacturing sites and supply networks,” the statement reads.
“Companies that have small sales numbers in the U.S. might still experience significant secondary effects since tariffs can influence the worldwide economy and alter consumer demands,” the statement read.
The Japanese economy has been struggling for years, plagued by weak demand as the population ages and declines, as more people stay single and have fewer children.
The Bank of Japan
, where interest rates were maintained near zero or even negative for extended periods, has slowly increased the reference rate, citing robust wage growth and gradual price increases.
The latest findings, which seem to
highlight the fragility of the economy
, make it more likely the central bank might hold off on further rate hikes.
Some analysts are advocating lowering the 10% consumption tax, which is similar to the sales tax in other nations, to help alleviate people’s hardships.
But so far
Prime Minister Shigeru Ishiba
hasn’t said he supports the idea. Japan’s national finances are under severe strain due to ballooning social welfare costs.
The economy grew an annual rate of 2.4% in the last quarter of 2024.
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