I'm quite economically illiterate, so pleased forgive my ignorance on this.
I was wondering if anyone could break down what the new US Tariffs on Japan (24%) might actually mean on the ground for (a) Prices in Japan, and (b) Investment in e.g., Ideco/Nisa mutual funds? Any ideas welcome!
US Tariffs - Impact on Japan
-
Listedbuilding
- Probation (posts moderated and no PMs)
- Posts: 1
- Joined: Thu Nov 07, 2024 3:23 am
Re: US Tariffs - Impact on Japan
I think it is hard to project what is actually going to happen with tariffs but in general they should drive up the currency of the dominant trade partner (e.g. US dollar appreciates against Japanese Yen), raise prices and lower the profitability of companies because the tariff shifts the supply curve to the left (supply is more expensive for each number of units supplied) and shift demand curves down (lower demand because prices are higher). The tariff itself is a tax that neither consumers nor producers benefit from.
That said, I am not changing my asset allocation at all, just anticipating lower returns going forward. Tax advantaged investment schemes like NISA and iDeCo still make sense when we are destroying the benefits of free trade.
That said, I am not changing my asset allocation at all, just anticipating lower returns going forward. Tax advantaged investment schemes like NISA and iDeCo still make sense when we are destroying the benefits of free trade.
-
sutebayashi
- Veteran
- Posts: 797
- Joined: Tue Nov 07, 2017 2:29 pm
Re: US Tariffs - Impact on Japan
I also imagine that these tariffs on Japan by the US should reduce demand for Japanese yen from Americans and thus on the balance strengthen the dollar, but the USD/JPY rate has gone from 150 to 145.80 today, so maybe I am missing something, if it isn't just a short term risk-off reaction of old.
On the bright side, not only the USD/JPY rate but the price of oil has plunged today too, and a stronger yen would be good for us as consumers here in Japan... But I am not sure the situation today is representative of what is going to happen over the longer term. (I don't think anyone is!)
Is Japan going to eliminate tariffs on US rice? I personally would like to have cheaper rice options in the supermarket. Recently there is Californian rice in my local, but at more than 2,000 yen for 4 kgs it is still more expensive than it used to be to buy 5kgs of Japanese rice. When we buy rice, it takes up more than half our grocery bill, which is ridiculous. Better to go hardcore Italian and eat pasta perhaps.
How about Japan imposing an equivalent baseline tariff of 10% on all US products in retaliation? Lower profits for Apple and Google at least, and Japanese people can buy Japanese made phones again for a change.
On the bright side, not only the USD/JPY rate but the price of oil has plunged today too, and a stronger yen would be good for us as consumers here in Japan... But I am not sure the situation today is representative of what is going to happen over the longer term. (I don't think anyone is!)
Is Japan going to eliminate tariffs on US rice? I personally would like to have cheaper rice options in the supermarket. Recently there is Californian rice in my local, but at more than 2,000 yen for 4 kgs it is still more expensive than it used to be to buy 5kgs of Japanese rice. When we buy rice, it takes up more than half our grocery bill, which is ridiculous. Better to go hardcore Italian and eat pasta perhaps.
How about Japan imposing an equivalent baseline tariff of 10% on all US products in retaliation? Lower profits for Apple and Google at least, and Japanese people can buy Japanese made phones again for a change.
-
ChapInTokyo
- Veteran
- Posts: 458
- Joined: Sat Jul 02, 2022 12:56 am
Re: US Tariffs - Impact on Japan
`Tariff man` Trump feels a lot like `rocket man` Kim trying to get some attention with some impulsive rocket launch. Unfortunately, Trump's meiwaku tariffs will throw a spanner in Japan's major export industries like automobiles and machining equipment for high tech industries, so I guess those industries need to pivot their efforts to opportunities in more receptive territories.
In the meantime, I too think that the yen will weaken against the dollar for the time being, since the BoJ are probably not so keen to raise interest rates with the fragility of the economy that the tariffs will bring about, and the Fed too being unable to lower interest rates with inflationary pressures caused by Trump's tariffs. Weaker yen means Japan will find it easier to export, so it's probably not all a bad thing.
In the meantime, I too think that the yen will weaken against the dollar for the time being, since the BoJ are probably not so keen to raise interest rates with the fragility of the economy that the tariffs will bring about, and the Fed too being unable to lower interest rates with inflationary pressures caused by Trump's tariffs. Weaker yen means Japan will find it easier to export, so it's probably not all a bad thing.