Over 70% of Japan Companies See Tariff Impact Within Expectations
Synopsis
Most Japanese businesses are handling President Trump’s tariffs better than what was feared, with over 70% of companies saying the impact matches their original expectations, and most sticking to their investment plans despite higher…
Most Japanese businesses are handling President Trump’s tariffs better than what was feared, with over 70% of companies saying the impact matches their original expectations, and most sticking to their investment plans despite higher trade costs.
Companies Keep Investment Plans Despite Trade Costs
A Reuters survey of 220 Japanese companies found that 84% of the firms plan to continue their current investment plans for this business year. The U.S. has imposed 10% tariffs on most countries, with Japan potentially facing 24% tariffs from July unless they make a deal.
The automotive industry faces 25% tariffs, which hit the country hard since its exports of automobiles to America are important for the economy. However, the companies are taking a long-term view of the situation first.
“After all, the Trump administration ends in four years. If we don’t carry on with our long-term investments, we’ll lose out in competition with other Asian countries,” explained a manufacturer manager.
The survey, conducted by Nikkei Research from June 4-13, reached out to 504 companies with 220 responding anonymously. About 71% of the firms said that the tariff impact fell within their initial expectations, suggesting businesses had prepared for trade disruptions.
Sales Tax Cut Divides Business Opinion
Japanese companies are split on whether the government should cut the sales tax to help people deal with rising prices. Four out of ten oppose any tax reduction, while the remaining six support some form of cut ahead of July’s elections.
Currently, Japan applies a 10% sales tax to most goods and services, with food and newspapers taxed at 8%. The main opposition party wants to remove the 8% food tax for a year, but the PM opposes this since sales tax funds social security plans.
Government Spending Concerns Remain High
About 63% of the survey respondents said the government should not issue any bonds to make up for the lost revenue if the sales taxes are cut, while 37% supported borrowing to fund tax relief. This shows concerns about Japan’s aging population. With three out of ten people aged above 65 or above, Japan faces the world’s most advanced aging society challenges. However, some businesses favour temporary relief.
The political landscape also interests businesses, with 32% favouring the current ruling party while 20% want the Democratic Party for the people as a third partner after recent electoral gains.
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At Inspirepreneurs Magazine, covering entrepreneurship, business failures, and the human stories behind the world's most ambitious founders. She writes at the intersection of strategy and storytelling.
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