The growing list of the main economies that warn of weaker growth due to our customs tariffs is a new member.
The Bank of Japan said on Thursday that it is expected that the Japanese economy will grow by 0.5 percent in the fiscal year that started on April 1. This is sharp A reduction of 1.1 percent of the central bank is expected in January.
In explaining the change, the Bank of Japan cited “trade and other policies” that lead to slowdown in foreign economies and the decline in the profits of local companies. Expectations were issued, in addition to announcing that the central bank will keep interest rates unchanged at 0.5 percent.
President Trump’s threats to target threats to economic wishes all over the world. In April, the International Monetary Fund Lower Her outlook for the year 2025 for all the groups of the seven countries, including Germany and Japan, which is third and third in the world, is largely due to the US tariff.
In Japan, the new taxes of Mr. Trump on imports – including a 25 percent tariff for imported cars – are already raising significantly on the economy. The country is also preparing for fees that are likely to be above 24 percent, which the Prime Minister said will cause a national crisis if not negotiated.
While Japan has transformed a lot of its manufacturing base abroad in recent decades, it still exports a large number of products, such as cars, to the United States. The elements produced by Japanese companies outside Japan and then face their shipment to the United States threatening high tariffs.
Japanese companies-which are to report the profits of the full fiscal year later this month-are already warning against the deterioration of profits.
Last month, the Japanese operator of UNIQLO reduced its profits for the second half of the year to August by about $ 70 million, expecting that the customs tariff will be hurting its American business. UNIQLO manufactures many of its products in countries including China, Vietnam, Indonesia and India, which also faces a higher tariff.
On Wednesday, the United States government said that the American economy was shrinking in the first three months of the year. A report on the manufacturing activity in China showed that Chinese factories witnessed their most severe monthly slowdown in more than a year.
In Japan, the disruption of customs tariffs exacerbates pressure on a already fragile economy.
With criticism of inflation from home food and the increase in superior wages for the past three years, Japanese consumers have been hesitating to spend. Poor consumption caused the average rate that was modified in Japan to 0.1 percent in 2024, a decrease of 1.5 percent in the previous year.
American customs duties are also holding the efforts of the Bank of Japan to return to more traditional monetary policies, and it was confirmed on Thursday’s decision to maintain fixed interest rates.
For decades, the central bank has maintained interest rates at or less than zero to push the Japanese economy from a continuous course of weak growth and contraction. These rock bottom rates were to encourage spending and generate moderate levels of inflation.
The Bank of Japan got a part of its desire to explode from the inflation motivated by the Covid-19 PandeMic Supply Schins and Geeblocarics. These high prices enabled the central bank to raise interest rates for the first time in 17 years in March 2024. The prices were raised again in July and January and pointed to the intention of continuing the direction.
Now, Mr. Trump’s tariff threatens the assumptions of the economic recovery and inflation that the central bank said will build its decisions to continue to increase rates.
Some economists expect that the economic slowdown caused by customs tariffs can lead to a similar decrease in prices. On Thursday, the Bank of Japan expected that Japan’s basic prices, which do not count fresh foods, will rise by about 2.2 percent of this fiscal year, compared to its previous 2.4 percent expectations.