Japanese manufacturers slightly more optimistic amid Trump tariff worries

Business Standard

17 hours ago

Business sentiment among large Japanese manufacturers has improved slightly, according to a survey by Japan's central bank released Tuesday, although worries persist over US President Donald Trump's tariffs.
The Bank of Japan's quarterly tankan survey said an index for large manufacturers rose to plus 13 from plus 12 in March, when it marked the first dip in a year. The survey is an indicator of companies foreseeing good conditions minus those feeling pessimistic.
Major manufacturers include auto and electronics sectors, whose exports to the US drive the Japanese economy.
US auto tariffs are a worry for major manufacturers like Toyota Motor Corp, but some analysts note global auto sales have held up relatively well in recent months.
The US has imposed 25 per cent tariffs on auto imports. Japanese automakers have plants in Mexico, where Trump has announced a separate set of tariffs. The US has also imposed 50 per cent tariffs on steel and aluminum.
Japanese officials have been talking frequently with the Trump administration, stressing that Japan is a key US ally.
Trump posted on his social media on Monday that Japan wasn't buying enough rice from the US.
They won't take our RICE, and yet they have a massive rice shortage, the president wrote, adding that a letter to Japan was coming.
Also on Monday, National Economic Council director Kevin Hassett told reporters at the White House that Trump is going to finalise the frameworks we negotiated with a whole bunch of countries after the weekend".
The Bank of Japan, which has kept interest rates extremely low for years to encourage growth, is expected to continue to raise interest rates, but some analysts expect that to wait until next year.
The central bank raised its benchmark rate to 0.5 per cent from 0.1 per cent at the start of this year and has maintained that rate. The next Bank of Japan monetary policy board meeting is at the end of this month.
The tankan findings work as important data in weighing a decision.
The weak yen has raised the cost of materials for Japan at a time when the US dollar has been trading at around 140 yen, up considerably from about 110 yen five years ago. A weak yen is a boon for Japan's exporters by boosting the value of their earnings when converted into yen.
The tankan showed sentiment for large non-manufacturers fell to plus 34 from plus 35. That was better than some forecasts, which projected a deeper decline.
The Japanese government reported last week that the nation's unemployment rate in May stood at 2.5 per cent, unchanged from the previous month.