BOJ Rate Increase: Updated Jan. 6, 2025.

Bank of Japan lifts policy rate to 30-yr high of 0.75% amid persisting inflation

Article source:   https://mainichi.jp/english/articles/20251219/p2g/00m/0bu/018000c

Ideas

The Bank of Japan wouldn't increase the rate unless it was confident that there won't be too many side effects to the Japanese economy. And at the same time trying to get the key rate closer to the level of the rate of other advanced economies.

Most economies when inflation is consistent will use the strategy of increasing the key rate as a higher rate is motivation not to take out business loans, consumer loans and using credit cards.

The BOJ is hoping that wage growth can help with the improvement of the economy and spur some kind of economic growth while the higher key rate might actually reduce some spending in the economy.

The Bank of Japan tries to ensure, with its communication, that whatever it says and does doesn't cause harm or upset both the domestic financial and global markets.

At the same time, it seems, as usual, with most central banks, it has kept some sense of the unknown what its going to do next as it wants to give itself room to change and maneuver as needed in the future.

The Bank of Japan, for the most part, is still has a dovish stance but it also gives itself room to make changes including increasing the key rate as needed to combat inflation of help the Japanese economy improve.

The Bank of Japan is in a difficult situation as it knows increasing the key rate can cause the bond yield to increase and at the same time might cause the Japanese yen to become weaker but its like a doctor prescribing a pill or medicine knowing full well there are going to be some side effects., but ultimately the potential for improvement is what the BOJ is looking for.

Japan is a resource-poor country and has to import much of what it needs, as as result a weak Japanese yen increases the price of imports, which are then passed-on in the supply chain including the final retail customer.

Again, the BOJ wouldn't increase the key rate if it felt that there is the possibility that it can help reduce inflation and help improve the Japanese economy.

But at the same time, its not a 100 percent guarantee that the rate increase will do what it supposed to do, as for example other advanced economies have increased the rate and its not a 100 percent full-proof remedy to reduce inflation and or improve an economy.

And yes, wage growth or companies increasing wages is not a full-proof strategy to help the economy, as to be understood, only about 30 percent of Japanese workers work for the large name-brand Japanese companies and the wage increase mainly goes to large company workers and the small and medium size company worker, which make up the other 70 percent of the Japanese workforce, usually get smaller wage increases which may or may not be more that what the inflation rate is in the economy.

There was always a goal or strategy for the lower borrowing costs, as the BOJ felt the Japanese economy at the time, was never really strong enough to handle a rate increase and that there would be too many side effects to the Japanese economy, so the reason for the low key rate for almost a decade. Was it the right decision at the time is difficult to say and running experiments on a an economy to see what would work and not work is not the same a running an experiment in a science laboratory, as all economists have to go on is observation related to what they do as see.

Deciding what it the real reason for inflation whether its cost-push factor or other factors is not easy to determine and the BOJ might be right or it might off a little as inflation could actually be above the 2 presence level. 

Most central banks want inflation to be around 2 percent, not much more, as they feel it's a manageable level where money is flowing through the economy at a good rate, not too fast and not too fast. 

Any slower they feel the economy is moving too slow and money or transactions are not enough and moving too fast or spending has become too much they might feel an economy is becoming over-heated.

Financial markets, both domestic and global watch what the BOJ is going to do almost everyday including what they say as what they say is usually clues to what might happen in the future.

As a result most central banks are very cautious or are very reserved with their communication  to public as they don't want to say or signal anything that can harm to markets or cause a 24 hour global move in the financial markets.

And again, to eliminate as many side effects as possible the BOJ or most central banks will not increase the rate anymore than is necessary as even a slight increase can have significant effects on an economy. So, if using the key rate and keeping it in its neutral zone is the best strategy that is what central banks will do.

And again, the BOJ is on purpose not saying where the neutral levels are as it wants to keep its options open and at the same there is always a level of uncertainty to where the real neutral level is or where is should be.

And yes, in theory, a rate hike potentially is supposed to cause borrowing to be more expensive, supposed to reduce spending, and supposed to reduce investment but at what level of each going to be reduced is always the key question and how long its going to take to reduce inflation or stabilize prices is again the key question, as at times is very hard to answer, as the BOJ or any central bank is dealing with human behavior and humans at times can be very unpredictable.

The current Prime Minister of Japan is a supposed fiscal dove which means she favors economic growth through government spending and even including keeping the key rate low.

But in this case, it seems she might be in favor of increasing the rate as a way way to help the Japanese economy as inflation as been continuous almost since the pandemic started and hasn't gone away just yet.

And of course a rate increase could cool the Japanese economy but again its seems to Prime Minister is willing to give the BOJ a chance with rate increase and see if it can reduce inflation and improve the economy.

Yes, for a very long time, while other central banks including the EU central bank and the US Federal Reserve were increasing the key rate many times since the pandemic the Bank of Japan kept its key rate almost at zero, as again it suggested the Japanese economy was just too weak to handle a rate increase and there were just too many potential side effects.

And yes Japan's fiscal health is always an issue whenever the Japanese government needs to increase spending to help the Japanese economy.

But the problem is the powers to be in Japan have used government spending for so long that it seems it feels there is no other way to help but to spend its way out of trouble.

Th problem is the powers to be in Japan know that its fiscal health is not the best and it has the highest debt to GDP ratio among advanced economies but feels it has to prioritize helping Japanese families and Japanese businesses over improving it fiscal health.

Have a nice day!

Japan Food Price Increases: Updated Dec 13, 2025.

Number of food, beverage items seeing price hikes in 2025 in Japan to exceed 20,000

Article source: https://mainichi.jp/english/articles/20251128/p2g/00m/0bu/042000c

Ideas

For many years Japanese companies were reluctant to increase prices or pass-on their costs the next in the supply chain including the final retail customer, but as profit margins have become thinner companies now have no choice but the pass-on their costs.

Japanese companies actually felt they had a deep relationship with many of their customers and the companies didn't want to upset the special customer/company relationship but those days might be long gone.

Inflation in Japan has been continued challenge for not only Japanese households but Japanese companies too, and with the weak Japanese yen, Japan has to import much of what its needs which means the weak yen increase prices even more.

The post pandemic years of 2002 and 2023, well not that far out of the pandemic as Japan was still in relative lockdown at the time, inflation was a major challenge then as it is now in Japan, as Japanese household's disposable income is less and less each year due to inflation which means they have less money to spend in the Japanese economy.

Some might say why doesn't the Japanese do something to reduce or curb the price increases. And the answer is government really can't do much as the burden falls on businesses to lower prices based on supply and Japan.

Government can and do sometimes put price control on food or products which as the main food staples such milk, bread, eggs, some meat, and you would think rice in Japan too.

But price controls while they might help households in the short-run are actually a potential distortion to a market economy as they can do more harm than good.

And then there is the idea of subsidies which are often used in Japan related to high gas prices and or energy prices but eventually someone has to pay for the subsidies, and usually it might be the wholesaler or the import company.

The food price increases might not be that noticeable for a segment of the Japanese population but for the lower-income groups including the fixed income groups the price increases might be very noticeable to the point they start to look for substitutes for the regular food products they might want to need to buy.

And at the same time as these lower-income groups and fixed income groups look for food substitutes they might begin to buy food that is not as healthy for them.

Lets hope for the good of Japanese households that the increase in food prices in Japan will subside but it might not happen as it seems inflation just keeps rolling along with no end in sight for Japan.

Food prices are the result of supply and demand, for the most part, but in Japan food prices might be more related to the weak Japanese yen as as the yen is weak it causes import prices to be even higher.

Japan is a resource poor country and has to import much of what it needs which means it's very vulnerable to global prices increases which Japan has no control over.

And then there is the possibility of the supposed logistics system with maybe too many wholesalers which can drive up the cost of food products and every time a product moves from one wholesaler to another they add more the price of the product so that when it gets to the final retail customer the price as increasing significantly.

Have a nice day!

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!

BOJ and Wage Trend: Updated Sept. 19, 2025.

BOJ to release wage trend data from 2027 in Tankan survey

Article source: https://mainichi.jp/english/articles/20250911/p2g/00m/0bu/046000c

Ideas

It seems there are already a lot of surveys related to all kinds of activities in Japan by almost every organization conceivable but I guess the Bank of Japan wants its own survey to feel most secure and reliable about the wage data.

It's possible, but not conceivable, that the surveys coming from the labor and company organizations could be slightly off or are padded to make the wage information look better than it really is. 

For example, as wages for small and mid-size companies are always a little suspect as they are less than large company salary increases they could be made to look better as way to show that that companies are increasing wages which a lot when reality it might not be that much of a wage increase.

Yes, not all companies cooperate in surveys as they might feel embarrassed with the wage increases they are giving their workers and or want or need to be secretive about their wages for competitive reasons.

At the same time it might not be easy to get some companies to cooperate as they might not have the resources needed to reply to a survey from an organization.

It's the small and mid-size companies that need to most help with wage increases and it would be in their best interest to cooperate so that government organizations can plan ways to help them, otherwise government and other organizations are in the dark about small and mid-size companies situations.

Data information is good and needed but will it influence companies to increase wages which is sorely needed in Japan to help the economy grow and combat continued inflation.

If other companies see that wages are increasing the might be less hesitant to increase wages for their employees too.

But at the same time, some or many small and mid-size companies just don't have the resources needed to match what other companies are doing.

And with there being a real labor shortage in Japan now some might want to increase wages to keep or get new employees but they just don't have the resources needed to do it.

The June survey and the December survey goals seem very good but what's to keep some companies from not giving the correct information as a way to look good in the eyes of the BOJ.

There is always a chance, as with any survey, that the survey participants will not fully comply with the survey and will make it look better for them.

Small firms are always having difficulty with keeping up with bigger ones and its not just in Japan its a global situation as the large companies, globally always have more resources than the smaller companies.

But maybe in Japan its even more pronounced as their is always a huge gap between the haves, the large companies, and the have nots, the small and mid-size companies due to a huge gap in resources.

The tariff situation is definitely going to affect Japanese companies, which ultimately will affect Japanese consumers but when will it really be seen. It could begin September or the 3rd quarter as the new tariff rates go into effect.

And then there is the Bank of Japan having to decide what do to as the US Federal Reserve just cut its rate, due the US economy slowing and job growth really slowing which means whenever the US reserve cuts or increases it rate central banks globally begin to look and decide if they will follow with a rate cut just not at this time.

And yes, inflation in Japan is above the 2 percent goal for inflation in Japan, which  is actually the goal of many central banks to keep inflation around 2 percent as they feel its a manageable level and shows an economy is moving enough for economic growth but not too much.

Have a nice day!

Japan Companies and Wage Increases: Updated Aug. 21, 2025.

Major Japanese firms' monthly wage hike tops 5% for 2nd straight year.

Article source:  https://mainichi.jp/english/articles/20250806/p2g/00m/0bu/041000c

Ideas:

While its good that large company employees got a wage increase of more than 5 percent, it should be remembered that up to 70 percent of Japanese workers don't work for large Japanese companies but rather small and midsize companies, which usually don't have the resources needed to pay the same wage increase as large companies.

What this means is small and midsize workers in Japan might not have the same amount of disposable income to spend in the Japanese economy which of course might mean less economic growth.

Many companies are increasing wages as a way to keep needed workers and to lure needed workers to work for them. But the problem is, again, many small even mid-size companies just don't have the resources needed to attract workers as, yes, there is a definite labor shortage in Japan that is going to maybe cause some small Japanese companies to close.

Unfortunately, now with the US tariff situation Japanese export companies could be significantly affected which means as profits decrease and profit margins decrease small and mid-size Japanese exports companies are going to be the effects of the tariffs the most. Large Japanese companies that export might be able to absorb some or most of the tariffs.

It could be suspected or maybe even assumed that large Japanese companies, as reported in some articles years earlier, that large companies were hording cash and for a long time didn't give significant wage increases to their workers.

But many Japanese companies, especially publicly traded companies, are not obligated to take care of their shareholders first and not so much about companies workers who now might just be considered commodities to be easily laid-off when needed.

Non-manufacturing companies, which many are service-type companies, usually don't have large profit margins and can't afford to pay the same wage increases that manufacturing companies can pay.

While its good to focus on what large companies did with wage increases, but again, it must be remembered that 70 percent of Japanese workers don't work for large companies but small and mid-size companies.

Large companies, globally, in every country usually get all the news but most economies are made up of small and mid-size companies that employee more workers than large companies.

Large companies might drive some of an economy but they don't drive the majority of an economy which small and mid-size companies do when everything is added up.

And the spending in an economy by small and mid-size workers might be significantly more than what the 30 percent of large companies employees spend in an economy.

So its a mistake to ignore the small and midsize companies or their workers in an economy as not being very significant when if fact they might out-spend large company workers by 3 times.

Have a nice day!

Japan's Real Wages: Updated August 7, 2025

Japan's real wages fall 1.3% in June despite summer bonuses

Article source:  https://mainichi.jp/english/articles/20250806/p2g/00m/0bu/012000c

Ideas

It should be remembered that 70 percent of the Japanese workforce are not working at large Japanese companies but rather small and mid-size companies that maybe don't have the resources to pay large summer bonuses.

What sometimes happens, in many economies is as inflation continues on wages too will begin to increase as money flows through the economy but Japan is in a completely different universe and normal economic idea are not working.

Inflation can be both positive and negative depending on other factors in the economy such as the movement of money and the interest rate at the time.

And again, as mentioned 70 percent of the Japanese economy is not large companies but small and mid-size companies that probably don't have the resources to pay the same wage increases as large companies or even the same bonuses as large companies, which means inflation for many in the Japanese economy could still be higher the the wage increases of some or many.

All of the data that is given in this article is good but a better question might be what was the average wage increase for small and mid-size companies and what kind of summer bonuses did small and mid-size companies get during the past year.

Everyone wants to talk about large Japanese companies like they are the back-bone of the Japanese which they aren't as small and mid-size economy actually drive the economy even more.

Wage increases of course are very important, for the Japanese economy, and for every economy but what needs to be included in article discussions is what is happening with the small and mid-size companies in Japan as it seems they are being left behind and not getting the wage increases needed to help Japanese families not to mention the need to grow the economy.

Nominal data is useless for the average Japanese household as it includes wages plus inflation which distorts the actual actual purchasing power of consumers in the Japanese economy. Nominal data is like a fantasy of what you might think is good but in reality is a distortion.

Every recent Prime Minister has said they are going to increase wages but the wage increases so far hasn't really been completely significant for the average Japanese household just yet.

The challenge is wages in Japan, in relation to other OECD economies has been decreasing for the past three decades and its just been the past two years that wage have finally began to increase enough to maybe just maybe Japanese workers can finally begin to see some daylight at the end of the long three decade tunnel.

Interest rate increases can be a positive and a negative factor in an economy such for the banking system they can be a positive but at the same time can be a negative.

For the average business they can a negative in that loans will now be more expensive and especially for small business who need loans to maybe get their inventory orders it can be a major negative for them.

For household their mortgage payments could increase along with interest rates on the use of credit cards too.

But at the same time increasing they key interest can be an incentive for an economy to slow down which in effect could potentially reduce inflation.  

But again the Japanese economy, for many reasons has been exactly operating on sound economic factors and a key rate increase by the Bank of Japan might not work and could be for of a negative than a positive. Only time will tell.

Have a nice day

Japan Core Consumer Prices: Updated April, 19, 2025.

Japan's core consumer prices up 3.2% in March on high rice prices

Article source:  https://mainichi.jp/english/articles/20250418/p2g/00m/0bu/008000c

Ideas;
Core consumer prices in Japan has been increasing ever since the pandemic started and while it might be slowing gradually there is no end in sight for Japanese households or the Japanese economy.

The Bank of Japan's target of 2 percent is a reasonable goal, like other central banks, but not much as changed even though the BOJ has implement two rate increases to try and decrease inflation with no really affect.

Perhaps the BOJ needs to increase the rate even more, but at the same time, there might be too many side effects that could hurt the Japanese economy.

From 3.0 to 3.2 percent might not seem that much of an increase but it could be enough to cause stress on some Japanese households including those with young children, or single parent households or even those on fixed incomes in Japan.

And it might be remember, that this might be increase of one month, but what about all of the other months where there were price increases and it starts to add up each month over time.

It can't be said that inflation in the US has decreased that much as many US households too are still feeling the affects of inflation.

An increase of 2.7 and 2.8 percent doesn't seem like that much but tell that to the Japanese single parent, or the part-time worker, or the fixed income couple in Japan.

At the same time, as inflation continues to increase in Japan, income inequality keeps increasing in Japan, which is the difference between the highest income and the lowest income and its been increasing every year since the asset bust of 1989. 

What is happening as income inequality continues to increase in Japan, it decreases Japanese consumer's disposable income which means less and less Japanese households are able to spend freely in the Japanese economy which is reducing economic growth in Japan.

Some might say the Bank of Japan needs to do more or some might say the Japanese government needs to do more to reduce inflation but governments can only do so much as maybe the normal tools used to manage the economy are not working there might not be much that can be done and the idea then is too just let inflation run its course naturally and hopefully it decreases over time.

That might be one strategy with the idea of do no harm, meaning don't make the situation worse, as maybe other more stern measures might cause more harm than good in the Japanese economy.

The Bank of Japan and the Japanese government are in a tricky situation now with more like a  catch-22 situation meaning whatever we do are going to have significant side affects and there is no real significant way to reduce inflation without harming the economy or Japanese households.

Its unfortunate that there is a so-called rice shortage in Japan or was rice shortage, as the Japanese government has attempted to release its reserve rice stockpiles to increase supply but with no real significant difference in prices and maybe the middlemen are keeping the prices artificially high at this time to maximize prices as much as possible.

Real wages is a different but still related story as inflation keeps real wages from increasing which means Japanese households have less and less purchasing power and or less and less disposable income to use in the Japanese economy.

And all of this means is Japanese consumer spending might be 50 percent of Japan's GDP, but as Japanese consumers real wages keep decreasing there is going to be less and less spending in the Japanese economy, and again, less economic growth.

It's quite possible some in the Japanese rice market might have more than normal market power, meaning they are influencing prices in a way that is upsetting the normal supply and demand mechanisms.

While in a market economy, everyone has the right to buy and sell as they see fit, but at the same time, there is the idea that no actor in market can just set a price that might be against the best intentions of society and that might be happening now. There is also the idea of whatever the market can bear, meaning the highest price we charge and not lose customers. But in this case consumers continue to buy rice, at a very high price,  as its a very important stable for Japanese households.

It seems Japanese suppliers maybe are using the hot weather or higher production costs as a way to keep prices high as why have rice prices this year increased significantly when production costs might have been increasing for many years.

In this case, it might be a good time for the Japanese government to introduce temporary price controls on rice, meaning put a maximum price on rice and then give subsidies to the Japanese farmers or middlemen to ease the stress on Japanese households.

Again, while not trying to influence supply and demand normal mechanisms too much price controls on Japanese food stables might be needed for the short-term until prices can bet back to some kind of normal. to reduce the stress on Japanese households especially those with children, those who are single parent households and fixed income households.

There is no real guarantee that rate increases can reduce inflation and there is no really guarantee how long it will take and there is also the problem with the side affects of rate increases which could significantly affect some Japanese households.

The Japanese economy is still in a stagnant situation, meaning it really hasn't grown that much or even at all for a significant number of years.

And then there is the idea of wage increases in Japan, but wage increases need to be felt by all Japanese workers and not just those in large Japanese companies. For example, its estimated that 70 percent of the Japanese workforce don't work for the large name-brand Japanese companies but small and midsize companies which tend to pay much less in wage increases.

Yes, the T administration has caused chaos all over the global arena and there seems to be no letup to the confusion.

There are no winners in a trade war and if the there is China/US trade war its going to affect all countries globally and there no one country that is safe.

It might not be the right time for the Bank of Japan to make any changes as the Japanese economy is maybe just waiting to see what is really going to happen.

Unfortunately T is not following normal procedures as T really doesn't have the power or authority to decide tariffs. as the US congress, is supposed to have the authority on tariffs and trade deals, but T is not a normal president following the rule of law or respecting the checks and balances of normal president.

Have a nice day!

Japan Economy and Tariffs: Updated April 8, 2025.

Trump tariffs may push down Japan's economic growth by up to about 2%

Article source: https://mainichi.jp/english/articles/20250404/p2g/00m/0bu/004000c

Ideas:

The attempt of this analysis and commentary is not to just criticize what is going on with the US situation but to try to understand what and how its going to affect Japan and of course other countries globally. There are already hundreds if not thousands of hours of TV programs and articles written about what is happening so the attempt will be to give a different angle to what is already known.

The world trade order or trading order has taken about 50+ years to develop and its a very delicate system of supply chains and partnerships developed again over many years of countries working together to eventually find the common good for all.

And yes, unfortunately some countries have more market power than other countries which is why the World Trade Organization was set up to try and to minimize those discrepancies in the world trade system.

It's already known back in the late 1920's and early 1930's how the system was almost derailed with attempts buy one country to become too isolationist and or use tariffs for its own good at the detriment of all other countries.

So here we go again, with the US administration attempting almost the same thing with an attempt to re-configure the world trading system, and again its a very delicate system that cant be easily changed without disrupting a lot of financial systems and without harming people's lives. 

Unfortunately, Japan is always a quarter or two away from a recession and that has been its trademark fora very long time.

The Japanese economy has been built on exports and maybe again unfortunately its portfolio of exports is not large enough to handle a downturn. For example South Korea might be in the same situation and its export portfolio too is not as diverse as it should be as it too could be in for a projected recession. Both countries need to diversify their export portfolio such Japan needs to not rely on only Japanese cars and South Korea needs to not just rely on semi conductors to grow their respective economies.

The 0.7 percent over a year might be a good estimate but again, it might not even take that much for the Japanese economy to bottom out and again, Japan might be too dependent on Japanese cars as its main export product.

And again, using South Korea as an example, for many years its been known that South Korea had a very small export portfolio such as semi conductors and or course cars and for many years some have told South Korea to diversify it exports in case of a world recession which could happen soon. And now Japan too needs to heed to challenge to diversify its exports before its too late if not already.

Both Japan and South Korea maybe have relied on the US for its export bread and butter and needs to diversify as much  as possible to other markets if that's possible these days.

Yes, again, an estimate of 1.8 percent is probably correct but as always there are a lot of estimates about what is going happen to the Japan economy, but no one knows exactly just yet, as its still a little too early to see any affects of the tariffs.

This commentary will attempt to not use T's name here as it doesn't want to turn this commentary into a gripping session about what is happening. But things can quickly change and who knows 100 percent what is going to happen, as it's been seen before that T can change his mind many times before the end of his term.

Some have suggested that the tariffs T has implemented or going to implement are nothing but a negotiation tool to get other countries to reduce their tariffs.

T seems to think all or feel all countries are against the US and its economy and have stolen jobs away from the US. What T doesn't understand is the idea of absolute and comparative advantage that some countries, such as Japan and China can make products much cheaper or much better than the US can. And that has been the way of the trade system for many many years.

So the proposed tariffs by T might not be based on sound economic principles as it might be based on economic revenge or retribution just to satisfy his ego and power.

Again, the world trade order has existed, in its present form since WW11 ended and has been fairly successful for most countries. And yes, there are instances of market power and other weaknesses in the system, but its been the best trade system for most countries for a very long time.

What T has started could potentially be a trade war unless nations and governments can keep their cool and as needed, unfortunately, communicate their concerns to T's government. 

Communicating their concerns should not be a seen as sign of weakness or waving the white flag of surrender to T but as any country and many countries do they find ways to get around the situation the best they can.

And yes, it might be true that some countries have high tariffs on US products or products from other countries and maybe a country should look at what they can do with reduced tariffs from other countries.

We live in a global world of thousand of transactions daily of products moving from one country to another and maybe its time to look at how some countries continue to have high tariffs on some products.

To be honest, US cars are not that popular in Japan and maybe they never will be and whatever T tries to do, it's not going to improve the sales of US cars in Japan. T just needs to know and understand that the Japanese, and for the most part South Koreans, just don't need or want US cars. 

And, again, Japan need to diversify its export portfolio and not just relay on Japanese cars as its main export product and it especially needs to diversify into other markets, if that is even possible today and maybe they have saturated every market possible.

And here is a very important variable, in that there are many many subcontractors related to the Japanese car industry and US car makers too, and if tariffs are implemented on Japanese parts products they are going to hurt US cars too, which T seems to not understand.

Again, the Japanese administration should try and communicate their concerns to T and again its not a sign of weakness but a sign of practicability that there is always something to gain and always something to give in turn.

There are just too many US consumers who want Japanese cars and to not sell l.3 million cars in the US economy is not only going to hurt Japan but its going to hurt the US even more and there are many Japanese car dealerships in the US, and then there is all of the repair centers in the US and then there is all of the car parts stores in the US that could potentially be hurt by the tariffs.

The global economy is very blurred or unsure of what is going to happen now. and to be fair that seems to be what T likes, and he seems to like chaos and not calmness which the global markets need today.

Global stock markets have responded with a lot of uncertainty and a lot negatives and unfortunately a lot people have lost a lot of money over the past week, and its all T's fault.

Countries need to remain calm and not panic as panic is that last thing the global economy needs at this time.

Business confidence in Japan has never been that great lately and now with the US situation it might not get much better.

Japanese company wage growth is an important step to get out of the stagnation mode that the Japanese economy has been in for a very long time. Its been estimated too that wages in Japan are now some of the lowest among OECD countries.

The tariff situation is/could put a dent in Japan's attempt to end both stagnation and deflation and the country has been under cloud of both problems for many years and again the tariff situation doesn't help the situation.

An increase of 5.28 percent is good for large companies but small and midsize companies need to increase wages too, but many of them don't have the resources needed to match what large companies can do. At the same time some 70 percent of Japanese workers work for small and midsize companies and not the large name-brand companies.

Wage increases usually only happen in April of the new fiscal year, while inflation can increase any week any month of the year, so wages need to be enough to overcome inflation which then Japanese households can begin to feel good about their wage increases and begin to spend in the Japanese economy again.

It's good that Japanese companies increased wages for a second consecutive year, but who is going to pay for these wage increases. Are companies going to pass-on these wage increase through the supply chain until they reach the final retail customer.

But that's what companies do these days and they want to keep a specific profit margin and anything that decreases that profit margin gets pass-on through the supply chain including the final retail customer.

For a long time the BOJ under the former governor was very reluctant to tighten monetary policy as it thought that increasing the key rate would weaken the already weak Japanese economy.

So what is worse, the key rate being increased and or the side effects of the key rate. The Bank of Japan has to determine which might be worse for the Japanese economy. It's like taking medicine for some medical situation as the medicine might be good for a person but there are some side effects that could cause some situations in a patient.

Yes, that is the situation for many companies especially small and midsize companies that have very thin profit margins and can't afford wage increases due the increase of global raw material prices and or course the weak Japanese yen doesn't help too as it increase prices of raw materials.

So there might be a situation in Japan of the haves, the large companies that can increase wages and the have nots, the small and midsize companies that can't afford the same wage increases that the large companies are expected to do.

Yes, the tariff situation potentially is a deal breaker for some or many small and midsize companies who don't have the resources needed to overcome the tariff increases.

In this case, it might be prudent for the Japanese government to consider subsidies to help the small and midsize companies, like they did during pandemic.

Its uncertain, at this point if T is actually going to keep the tariffs permanently as he may or may not keep them as he says to always change his mind on things.

Escalating trade frictions could be a major sticking point, but the Japanese government has already indicated it's not going to retaliate and wants to find common ground with the US. 

That might be in Japan's best interest instead of taking the Chinese or the Canadian approach of escalating the so-called trade war.

To be clear business activities globally and not just in Japan are going to be hampered in the near-term until countries and companies figure out how to navigate the tariff situation.

Yes, unfortunately the global economy could be in for a decline and could affect many economies around the world, and for Japan it could keep Japan in its stagnation mode for a very long time unless the Japanese start to figure out how to navigate this situation correctly.

It might not be as severe as 2008 or it could be worse than the great recession and its again just too early to say whats going to happen but if the global stock markets are any indication its going to be a difficult ride for some and maybe many.

A GDP annualized growth of 2.2 percent is only an estimate of what the economy might do if it grew exactly the same for 4 consecutive quarters which it never does and especially doesn't do in Japan.

But three consecutive quarters of growth is good for Japan as it needs to keep the momentum going which it usually doesn't do as it always ends up a little and then down a little each quarter.

Potentially it could dampen Japan's GDP growth, but it should be remembered, Japan doesn't have a real free trade agreement with the US which seems kind of strange as Japan and the US are big trade partners.

There have been attempts like the Asia-Pacific deal but no one to one trade agreements exists between the two countries.If maybe Japan had some kind of free trade agreement that lowers tariffs for both countries it would go a long way to helping both countries.

And yes, again, potentially is could be a problem for Japan it doesn't have to be if the Japanese leaders can figure out a way to communicate what they need from the US, and maybe its time to reduce those huge tariffs Japan has on some US products. 

But if people are thinking if Japan reduces tariffs on US cars it might help car sales in Japan. Lowering tariffs on cars in Japan will never improve US car sales in Japan as Japanese consumers just don't want to need US cars.

Yes, again potentially it could reduce Japan's GDP by 0,7 percent, but if Japan had a more robust economy, that didn't rely only in exports it might not be that big of deal.

And Japan's economy seems to be too focused on exports while its domestic economy doesn't seem to get be as strong as it should be which should be a concern for the Bank of Japan and the Japanese government.

There seems to be a lot of numbers thrown around related to how much US tariffs are going to hurt Japan's GDP. While the shock has been sinking in to what could happen, at this time Japanese government leaders are in the US to find a way to limit US tariffs and maybe there might even be a new free trade agreement reached between the two countries.

The Japanese stock market like other stock markets expresses its disapproval of the tariffs with a major decrease in stocks and of course many people might have lost millions of yen in the process.

The tariffs T imposed on steel and aluminum is not only going to hurt foreign suppliers of those products but also any company or any US family that needs to buy steel and aluminum products in the future, as US companies are going to pass-on their tariffs along the supply chain until it reaches the final retail customer.

The same can be said for foreign cars sold in the US, as all tariffs are going to be passed along the supply chain and again to the final retail customer in the US.

To be fair, it seems T is just making up the numbers with no real economic or scientific reasoning behind the numbers. Tomorrow, next week, next month it could be something different.

That is very difficult for any company or even for the stock markets to figure out what he is exactly doing at this time.

Again, while Japanese cars have been a significant economic driver for the Japanese economy and the US remains Japan top market, and yes, thousands of small subcontractors are part of the Japan care production web, it should be noted that maybe Japan has relied on cars as its main and significant economic driver for too long as it needs other products to drive the Japanese economy now. 

The volume of exports to the US is good at 28.3 percent but again there should be a more diverse mix of products. For example at one time, maybe Japanese electronics had a larger share of the export mix, and what about Japanese TV's or Japanese washing machines and so which use to lead the world, but these days maybe South Korea and even China has more market share and even Taiwan related to TV's, electronics, washing machines and so on. Japan seems to have lost its way in some of these products.

Business confidence in Japan just isn't what it used to be as Japan has lost its swagger and doesn't seem to have much confidence these days. Japan back in the 60's, 70's, and even 80's led the world in making products and had a lot of confidence but not these days.

Gone is the swagger of the Sony's, the Mitsubishi's, the Panasonic's and even Toyota doesn't seem to have as much swagger as it used to.

Yes, Japan is at a critical juncture but its seems be at a critical juncture a lot these days and every time the Japanese economy begins to get back on track and get out of it stagnation phase it stumbles and its back into another recession type period.

Yes, the tariffs are a variable that Japan and the rest of the world wasn't looking for but, to be honest T is doing exactly what he said he would, and maybe definitely not Japans or any other countries fault but its the US who is at fault here for not listening and understanding what T had planned to do all a long.

Wage increases are needed in Japan and important as maybe Japan has some of the lowest wages and salaries among the OECD countries and yes, inflation since the pandemic continues to hang on in Japan while in the US it has decreased significantly on many items.

Not to blame anyone in the Japanese government and or the Bank of Japan, but you would think that something could have been done by now for the good of Japanese society and Japanese households.

The challenges is going to be what will the wage increases be for Japanese small and midsize companies as many of them just don't have the resources needed to match the wage increases of the larger Japanese companies. 

Up to 70 percent of the Japanese workforce,which means it they small and midsize workers don't get the same size wage increase that could potentially mean that is 70 percent of the Japanese workforce who are consumers and won't like their wage increases and won't spend in the Japanese economy is which needed for the economy to grow again.

The BOJ maybe needs to increase the key rate a few more times like the US did when it was going through its inflation challenges. But the real problem is can the Japanese economy handle the key rate increases which potentially could have some significant side effects related to the rate increase.

And again, even large Japanese companies are going to have challenge because of the increase in global raw material prices and the yen's depreciation and its could be even worse for small and midsize companies. Of course they can try to pass-on their costs to the next in the supply chain but sometimes that is not so easy to do.

The Japanese government needs to step in and aid the small and midsize companies with some kind of supplement that helps them reach the level of wage increases that the large companies are going to give. If not then workers at the small and midsize companies are going to be left behind and feel like have-nots compared to the large company workers who will be considered the haves of the economy.

Many seem to forget the trade war that developed between the US and Japan in the 80's when Japan was flooding the US with all of its low-priced but quality products. Many in the US were alarmed and upset that Japanese were gaining a lot of market share compared to US products. But the problem was not the Japanese products taking over the US markets, it was that the US products at that time were not very good and the US basically had become lazy and lost its way. Unfortunately the same could be said for Japan today.

Yes, Japan has relied on the world economy for a very long time to drive its economy and maybe to be fair, has somewhat neglected its domestic economy over its exports. Now might be a good time to re-think what it's doing and find ways to strengthen its domestic economy so that it doesn't have to rely so much on exports to the global economy.

The Japanese economy, all things being equal maybe looks like it has turned the corner on de-flation and or stagnation but GDP growth is just the tip of the iceberg as what happens in everyday life with Japanese households it what the real economy is and not some GDP number that most people can't relate too.

Finally the US tariff situation shook the global economy like no other event in recent history and not even the great depression of 2008 was like this situation, with stock markets globally losing billions of dollars or trillions on yen in Japan.

Not to be pessimistic but potentially it could get worse or it could almost change overnight if the correct leadership in the US finds a way to steer the US back into where it should be for the good of the world.

Have a nice day!