Japan warns of US tariffs after trade deal reached: monthly report
The government still maintained its overall view that the domestic economy is recovering moderately in its economic report for July, citing a pickup in consumer spending and improvement in employment and income conditions.
The report said it was positive that the deal removed "uncertainty" for the economic outlook but added that the impact of U.S. tariffs, which are still higher than those before U.S. President Donald Trump took office, has been observed "in some areas."
Export volumes of autos for the United States have remained nearly flat in recent months compared with a year earlier but Japanese automakers have cut prices of vehicles for the U.S. market or boosted shipments of low-price products.
Such efforts to mitigate the impact of an increased tariff of 27.5 percent imposed on U.S-bound cars in April are squeezing their profitability.
Japan and the United States agreed on 15 percent tariffs on cars and other products last week in Washington. Trump said earlier in the month that the world's biggest economy would impose 25 percent tariffs on imports from Japan starting Aug. 1 under "reciprocal" tariffs.
The assessment of overall exports was revised down to "almost flat" from "showing movements of picking up," citing a pause in machinery shipments to other Asian countries, the Cabinet Office said.
The government said separately the same day in its annual white paper that Japan is at a "critical juncture" over whether it can shift to growth driven by wage increases.
Japanese companies offered the highest pay increases in decades last year and agreed on similar wage growth this year but risks from the U.S. tariffs and inflation could hinder the economy from getting on a steady growth path.
The paper said the U.S trade policy could affect the broader Japanese economy, possibly undermining corporate hiring and capital spending and private consumption.
"It is important to continue careful analysis of the effects of tariff measures and to take every possible step to minimize their impact on domestic industries and the economy," the paper said.
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