Japan Expects Lower Tariffs Than Anticipated
Risks Remain Until Other Countries' Tariffs Are Finalized
With the summit between U.S. President Donald Trump and Japanese Prime Minister Ishiba Shigeru concluding on a successful note, there are prospects that Japanese stocks may show strength.
On the 9th (local time), Bloomberg reported, "Until last Friday, the anxiety that swept through the Japanese market turned into relief after Prime Minister Ishiba returned to Tokyo."
Experts evaluated the summit between the two countries as friendly and analyzed that this is likely to have a positive impact on Japanese stocks. Daiju Aoki, Chief Investment Officer (CIO) at UBS Smith Trustee, said, "There were concerns that Trump would impose tariffs on Japanese cars before the two leaders met, but there was no mention of that during the summit. There were also no additional demands regarding Japan's defense spending. This will bring relief to the market."
Ho-min Lee, Chief Strategist at Lombard Odier, assessed that although the two countries recently experienced friction over Nippon Steel's acquisition of US Steel, this summit reversed the unfavorable atmosphere. He added, "Especially with the friendly atmosphere at the summit and Japan's large-scale investment in the U.S. steel sector, Japanese investors were likely able to ease their tensions," noting that issues related to Nippon Steel could act 'constructively' on Japanese stocks going forward.
The currency issue, which was initially expected to be discussed by the two leaders, was not significantly raised, leading to expectations that the yen will find stability. This is because if President Trump imposes low tariffs on Japan, concerns about the Japanese economy will ease, resulting in a preference for the yen. Regarding this, Mari Iwashita, Senior Economist at Daiwa Securities, predicted that if the market accepts that tariff pressure on Japan will ease through this summit, the yen could become a 'safe asset.'
However, the relief expressed by some after this summit is unlikely to eliminate all risks to the Japanese market. Tim Waterer, Senior Researcher at Kohl Capital Markets, pointed out, "The possibility of Japan facing additional tariffs still exists," and added, "Until it becomes clear which countries will be added to Trump's tariff list and what rates will be applied, the enthusiasm for the Japanese market may wane."
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