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Photo courtesy of Yonhap News |
[Alpha Biz= Paul Lee] TOKYO, July 25, 2024 — Japanese economic experts warn that the recent U.S.-Japan trade agreement — which reduced reciprocal tariffs from 25% to 15% — will still negatively impact Japan’s GDP, despite praise that Tokyo “held its ground” in negotiations.
According to NHK, Shotaro Kugo, Chief Economist at Daiwa Institute of Research, stated:
“The newly agreed tariffs could reduce Japan’s real GDP by 0.6% this year, and the cumulative impact could grow to as much as 3.2% by 2029.”
Similarly, Takahide Kiuchi, Chief Economist at Nomura Research Institute, projected a 0.55% GDP decline over the next year, warning that:
“America’s ‘America First’ policy is increasing the risk for Japanese firms investing in the U.S., and some may reconsider their U.S. expansion plans.”
Kento Minami, Economist at Daiwa Securities, added that the 15% reciprocal tariff, along with existing 50% tariffs on steel and aluminum and 12.5% tariffs on autos, pharmaceuticals, and semiconductors, could contribute to a 0.6 percentage point drop in real GDP. He noted:
“If auto tariffs had remained at 25%, the GDP impact could have been as high as 1.1 percentage points. The deal effectively halved the potential shock.”
These projections reflect growing concerns over Japan’s macroeconomic stability. On the same day, the International Monetary Fund (IMF) advised Tokyo that any stimulus measures should be temporary and targeted at vulnerable groups.
Japan’s public debt-to-GDP ratio stood at 237% in 2024, according to Trading Economics — the highest among major economies, far exceeding Greece (151%), Italy (135%), and the U.S. (121%).
Political pressures are adding uncertainty. After the Liberal Democratic Party (LDP) suffered a major defeat in the July 20 Upper House election, there is speculation that populist stimulus measures and opposition-backed consumption tax cuts could gain momentum.
알파경제 Paul Lee 특파원(hoondork1977@alphabiz.co.kr)
