Trump tariff plan causes worries in Japan

March 3, 2018

Tokyo- The Japanese government and industry are worried about the possible effects on the domestic economy of tariffs, which US President Donald Trump on Thursday said would be imposed on steel and aluminum imports for national security reasons.

While the US move appears to mainly target China, a senior Japanese economic ministry official said there is "no guarantee" that Japan will not be affected after its steel exports to the United States surged 38.5 percent year on year in January.

In addition to concerns about a possible fall in Japan's steel exports to the United States, which currently accounts for around 5 percent of its total steel exports, there are worries that the US tariffs could prompt China to ship more steel within Asia, the main playing field for Japanese steelmakers.

"We are very concerned that the US tariffs would lead to a fall in steel prices (in the Asian market)," Nippon Steel & Sumitomo Metal Corp. President Kosei Shindo said.

The Japan Iron and Steel Federation, an industry group headed by Shindo, submitted a letter to Trump on Friday, strongly urging him to reconsider the plan to impose 25 percent and 10 percent tariffs on imported steel and aluminum.

The federation criticized the US tariffs as "a market-distorting measure which would cause serious harmful effects not only on steel exports from Japan but also on steel trade worldwide."

It also warned that the US measure "will create a negative chain reaction affecting not only steel but also other products considered to have national security implications, with other countries taking similar actions under similar pretenses."

US restrictions on steel and aluminum imports will be a "cost-raising factor" for Japanese automakers in the United States, Yoshimasa Maruyama, chief market economist at SMBC Nikko Securities Inc., pointed out.

"We're always watchful for protectionist moves," Yasuyuki Yoshinaga, president and chief executive officer of Japanese automaker Subaru Corp. , told a press conference on Friday.

On Friday, concerns about a US-triggered trade war sent Japan's benchmark Nikkei stock average plunging 2.5 percent, while prompting buying of the safe-haven yen.

"It's too early to say financial markets have gone through the Trump announcement's impact," a senior Finance Ministry official said. "We're keeping vigilant eyes on the markets." Jiji Press