Japan Government Assessment of Economy; Updated Oct.30, 2025.

Japan says economy recovering moderately, warns of US tariff impact

Article source: https://mainichi.jp/english/articles/20251029/p2g/00m/0bu/029000c

Ideas

The Japanese government, with no criticism, are always saying the economy is recovering moderately, and the reason for that reason is they don't want to upset the financial markets which potentially are easily upset with any kind of negative news.

Yes, most likely the US tariff situation is finally beginning to have an effect on the Japanese auto sector, which at this time, is the main economic driver of the Japanese economy, as no other sector has as much affect on the economy as the auto sector.

And yes, private consumption or consumer spending and capital investment or business spending are two leading components that are actually not that robust at this time.

Most likely, but not really known yet, many exports to the US from Japan might not be involved in the tariff situation except maybe steel and car parts which Japan does export to the US.

With regard to exports or even imports there is volume and value when measuring the amount or number, most likely Japanese did front load much of its cars to the US as a way to avoid or reduce the tariffs on cars, which means later they might have reduced car shipments.

It had been reported earlier, that Japanese car makers were shipping more less expensive cars to the US as a way to keep sales at certain level as they anticipated US consumers might begin to buy less Japanese cars.

As this is now the end of October, the effects of the US tariffs might actually be in full effect as most likely Japanese car makers and or US dealers begin to pass-on the tariffs to the final retail customer in the US.

It might take a few months to actually see how much of an effect the tariffs have on the Japanese car sector or on how it affects US consumers in the US.

Again, the Japanese government doesn't want to paint a bleak picture of the economy so it might say almost flat when in reality corporate bankruptcies might be close to being at an all time high in Japan due to labor shortages and continued increase on raw material prices.

Small and mid-size companies in Japan are most vulnerable with their thin or sparse profit margins as they can't afford to increase wages to get new workers and or keep the workers they have and then of course the continued increase in raw material prices have stressed out small and midsize companies more than ever now.

Again, not to criticize, but every new Prime Minister says they are for a strong economy and plan to deal with the inflation situation, but none have been able to do much yet, and haven't really been able to do much for the Japanese economy.

Its way to early to say anything about the new Prime Minister as she was just elected a few weeks ago and needs time to really do anything.

Have a nice day!