Japan warns of US tariffs' effect on economy after trade deal: Report
Trade deal with US eliminated 'uncertainty' on economic outlook, but higher US tariffs felt 'in some areas' in Japan
File Photo (Photo by Lokman Vural Elibol)
ISTANBUL
The Japanese government on Tuesday cautioned of the negative effects of US tariffs on the Japanese economy, after a trade agreement with Washington that lowered the tariff rate from what was previously threatened, according to a report by the daily The Mainichi on Tuesday.
In the Japanese government's July economic report, which noted an increase in consumer spending as well as improvements in job and income circumstances, Tokyo continued to maintain its overall assessment that the domestic economy is improving modestly.
Although the report said that the agreement eliminated "uncertainty" on the economic outlook, it also noted that the effects of US tariffs, which remain higher than they were prior to the inauguration of US President Donald Trump, had been felt "in some areas."
Japanese manufacturers have lowered the costs of their cars for the US market or increased exports of low-priced goods, but US auto export volumes have been almost unchanged in recent months as compared to a year ago.
Their profitability is being squeezed by these attempts to lessen the effects of a 27.5% rise in tariffs that was placed on automobiles headed for the US in April.
Last week in Washington, the two countries agreed on a 15% tariff by the US on Japanese automobiles and other goods. Earlier in the month, Trump said that the largest economy in the world will begin enforcing "reciprocal" tariffs on Japanese goods on Aug. 1, imposing a 25% levy.
According to the report, the evaluation of total exports was changed from "showing movements of picking up" to "almost flat," noting a halt in the supply of machinery to other Asian nations.
Japanese businesses committed to comparable salary growth this year after offering the largest pay raises in decades last year, but inflation and US tariff worries might prevent the economy from starting on a road of sustainable development.
The US trade policy may have an impact on the Japanese economy as a whole, potentially jeopardizing private consumption, capital expenditures, and corporate hiring, the report said.
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