Rugby World Cup and US trade deal successes can’t hide Japan’s economic troubles
- Japan has much to celebrate, in rugby and trade. But challenges remain: its cars are still exposed to US tariffs, exports are plummeting and interest rates are due to stay flat, driving banks to greater risks in search of profit
The successful hosting of major sporting events does wonders for public morale but the economic positives can often be short lived. Tournaments come, tournaments go.
As for the partial deal with the United States, what is immediately noticeable is that it does not include clauses covering Japanese car exports. That issue has been parked, so to speak. While Japanese Prime Minister Shinzo Abe has received verbal assurances from US President Donald Trump that Washington will not impose additional tariffs on vehicle imports from Japan, nothing has been put in writing.
The issue of Japanese car exports to the US will be addressed in a further round of trade negotiations in April 2020. US policymakers, conscious of the importance of the export sector to the Japanese economy, may be tempted to play hardball, even though Tokyo is a key US ally in the Asia-Pacific.
Japanese exports are already falling off a cliff. Finance ministry data released on September 17 showed Japanese exports in August dropped 8.2 per cent year on year. Falling sales of cars and car parts made a material contribution to the poor data.
