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The high tariff policy of U.S. President Donald Trump has sparked a full-scale trade war, and it has begun to shake up the financial markets. The Japanese government needs to deal with the situation while anticipating any developments.
On Wednesday, the U.S. government imposed an additional 25% tariff on steel and aluminum products from all countries and regions, including Japan. This is the first time that new tariff measures have been applied to imports from Japan during the second Trump administration.
This month, the United States has already imposed 25% tariffs on many imports from Canada and Mexico, and it has also raised the additional tariff on imports from China to 20%.
The European Union and China are among those who have responded with retaliatory tariffs. The trade war will only escalate. This is a concerning situation.
Until now, the markets had viewed that Trump was only threatening to impose tariffs as a way to make deals in order to achieve other goals and was being prudent about actually imposing them.
However, Trump has begun to emphasize more than ever that he believes tariffs will bring manufacturing back to his country and create jobs.
He also has made some comments that seem to be accepting of short-term economic turmoil, such as a resurgence of inflation. It is a worrying situation.
Due to the uncertainty about the future, the Dow Jones Industrial Average in the New York Stock Exchange has continued to fall significantly since the beginning of the month to below the 41,000 mark and to a level not seen since September last year.
More people are pointing out the risk of the U.S. economy, which has been called the only strong economy in the world, falling into a recession.
Trump should listen to the warnings of the market, shouldn’t he?
What is viewed as the most comprehensive of the high tariff policies are the “reciprocal tariffs” scheduled to be imposed on April 2. This policy involves matching tariff rates on imports from countries whose tariff rates on products from the United States are currently higher.
Another cause for concern is the increasing mention of Japan in connection with tariff policies.
The White House press secretary said that Japan imposes a 700% tariff on rice imports, suggesting that Japanese rice could be subject to reciprocal tariffs. Trump also criticized Japan, saying, “They don’t accept our cars.”
If high tariffs are imposed on Japanese vehicles, which account for about 30% of Japan’s exports to the United States, the impact will be enormous. Also, the assertion made by the press secretary lacks accuracy. The Japanese government must work toward correcting the misunderstanding of the U.S. administration.
Japan had the highest balance of direct investments for five straight years through the year before last, thus contributing to the development of the U.S. economy. Nonetheless, if the United States takes unreasonable steps toward Japan, it will be unacceptable. The Japanese government should not rule out retaliatory tariffs and other countermeasures as options.
