Speaking to CNBC Street Signs on March 12th, Martin Schulz, chief policy economist at Fujitsu, discussed Japan's strategy to counter potential Trump tariffs by emphasizing its U.S. investments and trade relations.
He also predicted that the Bank of Japan may act sooner than expected, as the weak yen fuels inflation and draws increased scrutiny from U.S. policymakers amid Japan’s sluggish economic recovery.
Key Takeaways
Japan’s Trade Relations with the US
Japan has maintained optimism in Asia regarding U.S. trade talks.
The Trump 1.0 administration’s tariffs on steel and aluminum had limited impact on Japan due to its specialized steel exports.
Japan is emphasizing its role as a major U.S. investor and its plans to increase investments.
Japanese companies already face increasing challenges balancing production between the U.S., Mexico, and Canada.
Japan is advocating for U.S. energy exports and highlighting the role of American digital service exports to Japan.
Japanese Yen and Currency Policy
The yen is widely considered too weak.
The Bank of Japan (BOJ) has aimed to strengthen the yen but faces challenges due to long-term monetary expansion under Abenomics.
The U.S. government is now targeting weak currencies, which puts pressure on Japan.
BOJ may consider rate hikes sooner than desired due to U.S. economic policies.
Bank of Japan’s Monetary Policy Outlook
Inflation in Japan remains high, with rising costs affecting consumer sentiment.
Wages are increasing, but price hikes—especially for essentials like vegetables—are outpacing them.
The BOJ had been expected to hold off on policy changes for about six months.
International pressure and inflation concerns may push the BOJ to act sooner, possibly as early as April, to stabilize prices and maintain economic confidence.
