As US and China spar over trade, Japan may avoid a direct hit – for now
First round of tariffs expected to have limited impact, but if conflict worsens it could lead to further appreciation of yen and punitive duties on Japanese cars
Japan, the world’s fourth largest economy, is likely to suffer from weaker trade flows and a further economic slowdown if tensions between China and the US continue to escalate – though a direct impact would be limited for now.
A spiralling dispute could lead to further appreciation of the yen and a large-scale sell-off on global stock markets – or the worst-case scenario of an all-out trade war that may include US President Donald Trump’s threatened punitive duties on Japanese cars, economists warned.
Washington and Beijing are set to take the first major step in escalating the trade conflict on Friday, when the Trump administration is expected to slap 25 per cent tariffs on US$34 billion worth of Chinese products from more than 800 categories – including intermediate goods such as parts for planes, printed circuit boards, light-emitting diodes and optical fibres.
“Although Japan has been wary about China’s rise in the past years, it would be an opportunity for Japanese companies if the Chinese economy remains stable,” He Ping, an associate professor at Fudan University, said. “If the Chinese economy slows down because of the trade dispute, that is never going to be good news for Japan.”
There are growing concerns over whether economies in Asia, particularly countries like Japan – a supply chain superpower and exporter to China and the US – will be caught in the crossfire of the first round of tit-for-tat tariffs.
Japan is the biggest contributor to China’s foreign value-added exports to the US, accounting for 5.5 per cent of the total value-added shipments, according to OECD-WTO data. That would mean Japan’s exports of intermediate goods to China and the US would be vulnerable if there was a slowdown in trade flows between the world’s two biggest economies.
