Japan is home to major auto and electronics firms, whose exports to the US are a major driver for the Japanese economy.
Business sentiment among large Japanese manufacturers has worsened for the first time in a year, partly because of worries about US President Donald Trump’s tariffs, according to a survey by Japan’s central bank released on Tuesday.
The Bank of Japan’s “tankan” quarterly survey said an index for large manufacturers that shows the percentage of companies foreseeing good conditions minus those feeling pessimistic fell to plus 12 from plus 14 in December, the first dip in four quarters.
Major manufacturers include the key auto and electronics sectors, whose exports to the US are a major driver for the Japanese economy.
A shrinking population has also dragged on Japan’s growth, while rising wages and a tourism boom have helped.
US auto tariffs are a worry for major manufacturers like Toyota Motor Corp. and Nissan Motor Corp.
Prime Minister Shigeru Ishiba said on Tuesday that his government was engaged in last ditch efforts to get the United States to exclude his country from auto tariffs. He said he was willing to fly to Washington to directly negotiate with Trump if necessary.
The US will begin collecting 25% tariffs on auto imports on Thursday, with taxes on fully-imported cars kicking off at midnight, U.S. time. The tariffs are set to expand to applicable auto parts in the following weeks, through May 3.
Japanese automakers also have plants in Mexico. Trump’s tariffs on imports from Mexico took effect last month.
The Bank of Japan holds a monetary policy meeting ending on 1 April to mull further interest rate raises, and the tankan findings will be among the key data looked at to make the decision.
Japan’s export-dependent economy has also been hit by slowdowns in overseas demand, as well as rising material costs, worsened by the weakening yen. The US dollar has been trading near 150 yen, up considerably from 110-yen levels marked five years ago.
The tankan showed sentiment for large non-manufacturers rose from plus 33 to plus 35, boosted by healthy tourist traffic.
Also Wednesday, the Japanese government reported the nation’s unemployment rate stood at 2.4%, a slight improvement from the previous month.
