Nearly 90% of Japanese firms say Trump's policies hurt business: Survey

Around 72 per cent of those surveyed cited Trump's trade policies, including tariffs, as a key issue, while 26 per cent blamed worsening US-China relations, the survey found

A recent survey by Reuters revealed that nearly 90 per cent of Japanese companies anticipate negative repercussions from the policies of US President Donald Trump. This finding underscores growing fear among businesses in Japan, the largest foreign direct investor in the United States.

 

The uncertainty stems from potential tariff hikes and escalating trade tensions between the US and China, which could impact Japan’s economic outlook. As the world’s fourth-largest economy, Japan relies on both nations for trade and manufacturing.  

 

The survey, conducted by Nikkei Research for Reuters, gathered responses from 233 out of 505 contacted companies between February 4 and February 14.

 

Majority of firms expect negative impact  

 

Approximately 86 per cent of surveyed businesses indicated that Trump's policies would either negatively or somewhat negatively affect their operations. In comparison, only a small fraction foresaw any benefits. In a previous survey conducted in December last year, 73 per cent had expressed concerns about Trump's second term, highlighting a growing sense of unease.  

 

Among those who viewed Trump’s policies unfavourably, 72 per cent cited his trade strategies — such as imposing additional tariffs — as the primary issue, while 26 per cent pointed to worsening US-China relations.  

 

Trade barriers

 

Trump’s trade policies have included a 25 per cent tariff on steel and aluminium imports, a 10 per cent tariff on Chinese goods, and threats of steep tariffs on Canada and Mexico. Additionally, he has directed his administration to develop plans for reciprocal tariffs against countries that impose duties on US imports.  

 

While Japan does not levy tariffs on cars, the US government has previously argued that non-tariff barriers hinder market access for American automakers. On February 20, Trump warned of potential 25 per cent tariffs on auto imports by early April, raising concerns about broader economic consequences.

 

A respondent from an electronics company noted that if tariffs were imposed on the auto sector, semiconductor sales could also suffer, reflecting possible ripple effects across industries.  

 

Deregulation and energy policies viewed favourably

 

Despite widespread concerns, some firms recognised potential benefits from Trump’s policies. About 37 per cent of those with a positive outlook highlighted deregulation and tax cuts as advantageous, while an equal percentage pointed to his support for fossil fuel production.  

 

When asked about their business strategies in the US, 16 per cent of respondents said they were adopting a more cautious approach, but 80 per cent reported no immediate changes to their investment plans.  

 

During a recent meeting with Japanese Prime Minister Shigeru Ishiba, Trump urged Japan to invest in US energy and technology sectors. Discussions also touched on Nippon Steel’s $14.9 billion bid for US Steel, with Trump indicating that the deal might shift from an acquisition to an investment.  

 

Mixed reactions to Bank of Japan's rate hike  

 

The survey also assessed business sentiment on the Bank of Japan’s (BOJ) recent interest rate hike. A majority — 61 per cent — considered the move appropriate, while 25 per cent felt it was premature, and 15 per cent believed it was overdue.  

 

In January, the BOJ raised rates from 0.25 per cent to 0.5 per cent, citing progress toward achieving a 2 per cent inflation target. A wholesaler respondent expressed concern over the prolonged depreciation of the yen, arguing that further rate hikes were necessary to curb capital outflows.  

 

Regarding future rate increases, 24 per cent of respondents favoured a hike in the July-September quarter, while another 24 per cent suggested waiting until the following year or later. An equal proportion believed that no further hikes should occur.  

 

BOJ board member Naoki Tamura recently advocated for raising interest rates to at least 1 per cent in the latter half of the upcoming financial year. However, 44 per cent of surveyed businesses warned that an increase to 1 per cent would negatively impact capital expenditures, while 21 per cent said this threshold was 1.5 per cent or higher.