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Additional U.S. auto tariffs could trim Japan’s GDP by 0.1%

  • June 10, 2018
  • , Sankei , p. 5
  • JMH Translation
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The U.S. and the other G7 nations clashed on trade policy at the discussions on June 8 at the G7 Charlevoix Summit. While the G7 will keep trying to find common ground, there is growing concern that if they fail to bridge their gap, President Donald Trump may go ahead with his plan to impose import restrictions on autos. This would come as a serious blow to Japan, for which automobiles are a key export. There are estimates that this could push down Japan’s GDP by 0.1%.

 

Trump ordered in late May a study on whether an increase in auto imports would constitute a security threat. He is considering imposing an additional tariff of 25%. If a “trade war” becomes more likely because the G7 Summit failed to reach an agreement, the U.S.’s additional auto tariffs will become a real possibility.

 

This would certainly have an adverse impact on the Japanese economy. According to the Finance Ministry’s trade statistics, Japan’s exports in 2017 totaled 78.2865 trillion yen, with 15.1135 trillion yen (19.3%) consisting of exports to the U.S. Automobiles made up 30% of the total and represented Japan’s top export to the U.S. Since auto exports are the mainstay of exports to the U.S., if they were to diminish due to additional tariffs, this would deal a blow to production and employment in related domestic industries.

 

According to estimates released by Germany’s Ifo Institute for Economic Research on May 24, the imposition of import restrictions could push down Japan’s GDP by as much as 4.456 billion euros (approximately 549 billion yen) or 0.1%.

 

Toyota Motor President Akio Toyoda, chairman of the Japan Automobile Manufacturers Association, voiced “grave concern” about the auto import restrictions in a statement released on June 8. Japan Chamber of Commerce and Industry Chairman Akio Mimura also stated at a news conference on May 24: “We’re hoping for the return of a level-headed America.” Since this is a critical issue for the industry, all attention is focused on the extent to which the G7 will be able to find a meeting point.

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