The Japanese government has renewed its warnings about the risks posed by U.S. trade policies, citing potential damage to growth and downgrading its outlook for corporate profits in its August monthly economic report.
Although Japan’s economy expanded faster than expected in the April–June quarter, analysts caution that ongoing global uncertainty fueled by U.S. tariffs could pressure the world’s fourth-largest economy in the coming months.
In its Cabinet Office economic report for August, Tokyo maintained its overall assessment that the economy is “recovering at a moderate pace.” However, officials noted that the impact of U.S. tariffs is becoming visible in some sectors.
On corporate earnings, the government downgraded its view for the first time in eight months, stating that improvements have stalled due to U.S. trade policy. “The assessment reflects the year-on-year decline in the financial results of listed companies for the April–June period,” a Cabinet Office official said during a briefing.
In July, Washington and Tokyo agreed to reduce tariffs on Japanese imports to 15%, in return for a $550 billion investment package directed to the U.S. through government-backed loans and guarantees. However, the details of the deal remain unclear.
Elsewhere in the August report, the government upgraded its assessment of public investment but cut its outlook for housing construction. Private consumption, which makes up more than half of Japan’s economy, was described as continuing to pick up.
