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U.S. President Donald Trump has rapidly imposed higher tariffs. If the measures are expanded in scope, it will not only have a serious impact on the global economy, but will also be highly detrimental to the United States.
Japan, together with other countries, must be persistent in negotiations with the United States and urge restraint.
On Feb. 4, the Trump administration imposed an additional 10% tariff on imports from China. Then, on Monday, the administration announced it would impose a 25% tariff on steel and aluminum products. This levy is set to take effect on March 12, and will apply to imports from all countries and regions, including Japan.
There is significant concern that the trade war will become even more intense due to a large-scale measure called “reciprocal tariffs.” Trump on Thursday ordered a plan be devised to impose such tariffs.
Under this strategy, the United States will raise tariffs to the same level as what other countries are imposing, if their tariffs are higher than those in the United States, in order to make the burden “equal.”
In the United States, the simple mean applied tariff is in the 3% range, but emerging and developing countries apply higher rates, with India and Brazil exceeding 10%.
The free trade system centered on the World Trade Organization (WTO) has allowed different tariffs to be imposed at different stages of economic development and has built mutually beneficial relationships. If the United States were to unilaterally raise tariffs, relationships of trust would be shaken to their very foundations. This is a situation that cannot be ignored.
The United States has said it will conduct a survey of each country over the next few weeks or months and decide on how large of a tariff to apply in each case. Countries should repeatedly convey to the United States that a high-tariff policy will lead to a reduction in trade and will benefit no one.
Trump may be aiming to reduce the U.S. trade deficit. However, it will take time for U.S. manufacturing companies operating overseas to return to the country.
Rather, the immediate impact is likely to be in the form of accelerating inflation. There is growing concern in U.S. industry about rising costs. Trump needs to listen to such concerns sincerely.
Japan also needs to be vigilant. Although tariffs are low under the Japan-U.S. Trade Agreement, the U.S. government may impose high tariffs over Japan’s nontariff barriers — its regulations, subsidy programs and tax systems, including consumption tax.
Some in the U.S. government point to Japan as a country with relatively low tariffs but high structural barriers, and the United States is expected to consider imposing tariffs on Japan.
If high tariffs are imposed on products by companies involved in the auto industry, the nation’s core industry, these companies will see their earnings deteriorate and momentum toward wage growth will be stifled. This could in turn hinder the growth of the Japanese economy.
Prime Minister Shigeru Ishiba said he told Trump during their recent talks that Japan will significantly increase its investment in the United States. Ishiba should stress to the United States the high level of contributions that Japan makes to the U.S. economy and make every effort to avoid high tariffs.
