Concerns linger in Japan and US over Trump tariffsーNHK WORLD-JAPAN NEWS
Starting us off is US President Donald Trump who signed an executive order on Thursday increasing tariffs on imports from dozens of countries including Japan. The administration says the new rates will go into effect from midnight August 7th. The measure says the baseline tariff to be imposed on imports from Japan is 15%. That is the same rate that Japan and the US agreed on in their tariff negotiations last week. Japanese officials said at the time that US levies on Japanese automobiles would be 15%. That number is based on cutting a 25% rate in half to 12.5 and adding an already existing 2.5% levy. But the latest executive order makes no mention of the treatment of Japan-made vehicles. Under the executive order, tariffs that the Trump administration originally threatened to impose on many countries and regions are adjusted downward. The US will continue to impose a uniform 10% tariff on its trading partners until August 7th. Meanwhile, Japan’s top government spokesperson Hayashi Yoshimasa says Tokyo will continue to closely watch the effects of the new tariff rate on the country’s exports. I’m expecting the president’s order and a series of agreements to reduce uncertainties surrounding US trade policies and lower downside risks to the Japanese and global economy. Hayashi said the government will continue to ask Washington to promptly implement agreements affecting Japan’s auto industry. This includes lowering tariffs on vehicles and auto parts. The US is not offering concessions to Canada, however. Tariffs are going even higher. President Trump has signed an executive order raising the import duty on the country from 25% to 35%. The new rate goes into effect on Friday. Exports covered by the North American Trade Agreement, known as the US MCA, will not be affected. Trump imposed the current 25% tariff on imports from Canada in connection with the crossber flow of illegal drugs. The White House says Canada has failed to cooperate in curbing the ongoing flood of fentinel and other illicit drugs. It also criticized its northern neighbor for retaliating against what it called Trump’s actions to address this unusual and extra extraordinary threat. Separately, President Trump announced that a higher tariff rate from Mexico, due to go into effect on Friday, will be paused for 90 days. Trump said in a social media post that he and Mexican President Claudia Shinbomb had agreed to the reprieve in a phone conversation. He wrote that the current tariff rate of 25% will be extended while the two countries continue talks on signing a new trade deal. Researchers at Yale University have been crunching numbers on Trump’s trade policies and counter measures from abroad. They say US consumers now face the highest average tariff rate in 92 years. The Budget Lab, a policy research center, calculated the effects of all US tariffs implemented this year through Wednesday. That’s before Trump signed the executive orders the following day. It says US consumers are paying an overall average effective tariff rate of 18.4%. That’s up from 2.4% before President Trump’s inauguration for his second term in January. The lab says the short-term inflation rate has risen by 1.8% due to the tariff measures. That’s equivalent to an average income loss of about $2,400 per household this year. There is growing anxiety among producers and consumers both in Japan and the US about what the levies mean for their bottom line. This brewery in western Japan has been in business for more than 140 years. It started exporting sake around three decades ago. A quarter of its total sales come from the US. The company says on top of the new tariffs, raw rice, an essential ingredient in sake, is expected to get more expensive. So, it’s considering to increase its prices overseas. The US is an especially big market, so the impact is huge on us. If we don’t raise prices, we will not be able to secure a profit. This farm in central Japan has already decided to raise the price of its rice in the US by around 7%. The company says Trump’s tariffs may force further increases, but it won’t be an easy decision. We can’t raise prices again and again. I’m a little worried because there are still uncertainties. There are similar concerns on the other side of the Pacific. This shop in Florida sells fruits and vegetables that come from Mexico and South America. Import prices are soaring. The owner says the cost of some mangoes jumped by 50% in just two months. This mango come from Mexico and this is very one of the the main sellers here in United States. people would probably just walk away or we probably get stuck with the product that we buy. It’s going to hurt the the the small business. It’s already hurt. And from fruits to fashion, this major US clothing maker sells products made in Asia. It estimates that if tariffs of 30% on Chinese products and 10% on products from elsewhere continue, its costs will increase by up to $300 million a year. I would buy less. You buy less. I would buy less. If you’re a billionaire, you could care less about how much things cost. But for the coming people, yeah, we’re going to suffer through a lot of things, and it’s not fair. Trump’s tariffs also remain a key concern shaping monetary decisions worldwide. This week, the Bank of Japan and the US Federal Reserve held policy meetings. They both left rates unchanged even though their monetary policies are heading in opposite directions. They share one worry, however, uncertainty over how the tariffs will impact the economy. The Fed decided on Wednesday to keep its target range between four and a quarter and 4 and a.5%. Fed Chair Jerome Powell stresses that officials will closely track economic data. Higher tariffs have begun to show through more clearly to prices of some goods, but their overall effects on economic activity and inflation remain to be seen. Powell has stood firm despite pressure from Trump to lower borrowing costs. Two Fed governors appointed by Trump voted in favor of slashing its rate. It was a rare show of disagreement at the Fed. Kato Izuru, chief economists at Totan Research, says that Powell’s remarks dampened market expectations for the Fed to make a cut in September. If the Fed decides to lower the rate too early, it would rekindle inflation, and that’s the last thing that Pal wants. A move too early could be seen by the markets as a response to political pressure from Trump. It could damage the Fed’s credibility in the long term and raise doubts about its ability to control inflation. That’s another reason why Pal has to show a cautious stance towards rate cuts. As the impact of high tariffs kicks in, the consumer price index will edge up for the bank to lower the rate in September. Employment data have to worsen to a serious level. Roughly 10 hours after the Fed’s decision, the BOJ also decided to wait and see. It hasn’t changed its short-term policy rate since January when it raised it to around half a percent. This was the first meeting since Japan struck a tariff deal with the US. BOJ officials say they want to keep monitoring corporate profits in other aspects of the economy. While uncertainty has eased somewhat, it remains high, especially regarding the impact of trade policies in various countries. Kato says that by the end of the year, continued inflation will likely pressure the BOJ to raise its rates. The BOJ is taking this position because the details of the tariff deal are still not clear. Another reason is the highly uncertain prospects of Japanese politics. The BOJ probably wants to see how things will develop on that front. But this attitude is inviting criticism. Some corporate executives have begun accusing the BOJ of being too slow to respond to soaring prices. So I think a rate hike sometime between October and December is highly likely. The central banks of both Japan and the US see the impact of Trump’s tariffs as being in the early stages. With more economic data on the way, they’re carefully weighing when and how to shift policy, each in their own direction.
US President Donald Trump has ordered a tariff rate of 15 percent on imports from Japan to go into effect on August 7. People in both countries worry how his trade policy will affect their finances. #business #japan #trumptariffs #trade #donaldtrump #world #usa
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