Japan economy shrinks more than expected as tariff hit looms | REUTERS
Japan’s economy shrank more than expected over the March quarter. GDP contracted by 7% or more than three times the drop analysts had forecast. The downturn was driven by stagnant private consumption and exports. And the numbers suggest the economy was losing steam even before Donald Trump’s tariffs kicked in. The US president has imposed 10% duties on most countries with Japan to face 24% levies from July unless it can strike a deal before then. Trump himself has suggested that could be possible from Japan. I’m getting along very well with Japan. We’re very close to a deal. But Trump has also put 25% tariffs on US car imports, a critical sector for Japan. and prospects for an agreement with Washington remain very uncertain. With exports and consumption weak, economists say it’s not clear what can drive growth. That could put Tokyo under pressure to step in. Some lawmakers have already urged Prime Minister Shigaru Ishiba to cut taxes or provide more stimulus. However, the government says there are no such plans for now. The trade war also leaves the Bank of Japan with a difficult decision. It had been expected to do more interest rate increases, but that could change if a Trump induced slowdown gathers momentum.
Japan’s economy shrank for the first time in a year and at a faster pace than expected, highlighting the challenge policymakers face as steep US tariffs cloud the outlook for the export-heavy economy
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