Japan- Measures taken to counter tariff woes

The tariff imposition by the United States was an unwarranted move that trade partners did not expect. There is considerable uncertainty surrounding all nations. The IMF, in its recent report released in April 2025, has downgraded the global growth forecast to 2.8% compared to 3.3% at the beginning of this year. It aligns with the trends of growth observed during the pandemic in 2020. Many nations are bracing themselves to help their nations stabilize since there is a lot of uncertainty about what to expect after the 90-day pause of the imposition of tariffs.

Japan's counter measure to US tariffs

Japan has taken measures to help its domestic economy remain afloat. The government has taken measures to stimulate domestic consumption and also reduce the costs of energy bills to minimize the burden of rising costs for its domestic economy. To begin with, the prices of petrol and diesel were brought down to 10 yen/liter, and subsidies were introduced to their energy bills as well.

To help the business houses, the government has instructed the government-backed banks to lend out low-interest loans to small and medium-sized companies. This will be a support for the business houses that contribute to the growth of the economy.

The measures are likely to be financed by a reserve fund, eliminating the need for an additional budget, as stated by their Minister of Economy, Ryosei Akazawa.

One of the major hit industries in Japan is the automotive industry, which is mostly an export-oriented market, and America is one of its major partners. The initial tariff introduced had a significant impact on the morale of the sector. With the introduction of 24% tariffs on all imports of cars and trucks to American soil, it will hit the industry hard in terms of its profit margins and plans for further expansion of the industry as well. With the talks with the American counterpart for negotiations, Japan hopes to get a fair deal in the negotiations. A fairly lower import tariff on Japanese automobiles could be beneficial for the economy. It can help the economy to thrive domestically and internationally, without any damage to the industry.

The markets have been extremely volatile since the imposition of tariffs, and growth for their markets has seen only a small growth of close to 2%. With the talks of negotiations said to be in the way, the question of a favorable outcome is yet to be certain. The hope now lies with the US Fed to continue its policy of cutting rates, and with Trump easing the tariffs on the nations, which can minimize the damage.