Japan Must Take Lead in Maintaining Free Trade System, Says Chairman of Japan Trade Group

The Yomiuri Shimbun

6:00 JST, April 26, 2025

Tatsuo Yasunaga, chairman of Japan Foreign Trade Council, Inc., says that Japan must take the lead in maintaining a free trade system amid “extremely low visibility” on the policies of the administration of U.S. President Donald Trump.

The following is excerpted from an interview with him conducted by Yomiuri Shimbun Staff Writer Tomohiko Kanai.

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The biggest risk with the Trump administration’s tariff policy is that it could trigger a global recession. Due to the extremely low visibility on the policy, businesses are unable to move forward with planned projects, as they are forced to wait and see how things develop.

Given the impact on the U.S. market and the global economy, business negotiations have become more difficult under traditional assumptions. If investment stalls, economic activity will contract, leading to a recession. The storm triggered by the United States is currently reverberating worldwide.

Japanese trading companies have shifted their focus from imports and exports to business within the United States. While the direct impact of the current tariff policy has not been significant, if inflation accelerates and financial markets cool, consumption in the United States will also decline. Naturally, businesses operating solely within the United States will also be affected, and international market conditions will deteriorate. This uncertainty is having a negative impact on corporate activities.

But it is U.S. companies that will be the most affected. At any rate, the market has determined that the tariff policy is not economically rational, which is why financial markets are suffering. U.S. business leaders should speak up.

I expect that a landing point will be reached on tariffs, and a win-win relationship will eventually be established. The COVID-19 pandemic was also a situation with low visibility, but the current situation is man-made. We cannot negotiate with a pandemic but we can with the United States, since it presents its arguments.

The United States is a superpower with abundant resources, but it can’t do everything on its own. Its manufacturing industry has been hollowed out, and its production technology and engineering capabilities have already flowed outside of the country. The question of how Japan can support the United States in this regard could be one way to build a win-win relationship.

At the same time, Japan, which lacks resources and food production capacity and is facing a declining population, must cooperate with other countries around the world. Now is the time for Japanese companies to further globalize their operations. At the center of this effort should be the Global South, which places the highest priority on economic growth. These countries [in the Global South] will choose their partners based on economic growth and the need for a free trade system.

Countries like India, those in Southeast Asia and Brazil have a large pool of talented individuals. For Japanese companies to continue growing, they need to both do business in emerging markets and also establish systems to attract talented individuals from these countries.

Many young Indians have worked in the IT sector in the United States, but the Trump administration has taken a hard line on immigration. If Japan can create an environment that young Indians want to work in, a significant trend could emerge.

To avoid limiting the scope of Japanese companies’ activities, Japan must take the lead in maintaining a free trade system. We should discuss with like-minded countries how to build the optimal supply chain and the future of free trade.

Tatsuo Yasunagal

Yasunaga, 64, graduated from the University of Tokyo’s School of Engineering and joined Mitsui & Co., Ltd. in 1983. After working in several positions at the firm, including head of the Corporate Planning & Strategy Division, he became the youngest president in the company’s history in 2015. Yasunaga has served as chairman of the Japan Trade Association since May 2024. He also chairs the Japan-India Business Co-operation Committee of the Tokyo Chamber of Commerce and Industry.