Daiwa Securities estimates that Trump’s proposed 25% reciprocal tariffs on Japanese goods could reduce Japan’s real GDP by 1.1% cumulatively.
Economists at the firm project real GDP growth of just 0.1%–0.2% for FY2025, a sharp slowdown from 0.8% growth in FY2024.
While the tariffs may not trigger a major shock, ongoing labour shortages could sustain inflationary pressures.
As a result, the Bank of Japan is likely to continue with its gradual interest rate hikes, rather than easing policy in response to slower growth.
Bank of Japan Governor Ueda
