Nomura: Japan's GDP Expected to Rise 0.05% Over Three Years
As the United States and China implemented follow-up measures to their agreement to "refrain from escalating the trade war" on November 10 (local time), it is expected that this will have a positive impact on the Japanese economy, in addition to boosting the global economy.
According to the Nihon Keizai Shimbun (Nikkei), Kiuchi Takahide, Chief Economist at Nomura Research Institute (NRI), estimated that "if the United States reduces tariffs on China by 10%, global real gross domestic product (GDP) will rise by about 0.04% over the next three years, and Japan's GDP will increase by about 0.05%." These estimates are based on calculations using the Organisation for Economic Co-operation and Development (OECD) model.
Previously, the administration of President Donald Trump reduced the so-called "fentanyl tariff" imposed on China from 20% to 10%, effective at 12:01 a.m. Eastern Time (2:01 p.m. Korean time) on this day. From this day forward, the additional U.S. tariff rate on Chinese goods will be 20%. In addition, the United States Trade Representative (USTR) announced that port entry fees imposed on Chinese vessels and others would be suspended for one year starting today.
China, for its part, suspended up to 15% retaliatory tariffs on U.S. chicken, soybeans, wheat, corn, and cotton from 1:01 p.m. local time on the same day. However, China will maintain up to 15% additional tariffs on U.S. liquefied natural gas (LNG) and petroleum, which were implemented in February, as well as the 10% additional tariffs imposed on U.S. imports as part of reciprocal tariff measures.
In May, the United States and China agreed to cancel 91% of the 125% additional tariffs, defer 24%, and impose 10%. The 24% tariff will be deferred for an additional year until November 10, 2026. These measures are part of the agreement reached at the U.S.-China summit between President Trump and Chinese President Xi Jinping held in Busan on October 30.
However, this U.S.-China summit is being evaluated as a "political compromise" by President Trump. In fact, President Trump explained that although he had an extensive conversation with President Xi about the Ukraine issue, they did not discuss the oil issue. The issue of importing Russian oil is one of the matters on which the Trump administration has taken a hardline stance in order to bring an end to the Russia-Ukraine war. While the United States has imposed retaliatory tariffs on countries such as India that import Russian oil, it has taken a different position only with regard to China.
Chief Economist Kiuchi pointed out that the reason the United States cannot strongly block China's imports of Russian oil is "because China's restrictions on rare earth exports could seriously damage U.S. electric vehicle and military equipment production."
He added, "The Trump administration, which is highly dependent on rare earths, cannot maintain a hardline stance against China. Although it threatened 100% tariffs this time as well, it ultimately ended with a compromise in the form of tariff reductions."
He further commented, "If the Trump administration cannot implement a tough tariff policy against China, which is the United States' largest trade deficit country, it can be considered that the tariff policy aimed at 'reducing the trade deficit' has reached a stalemate."
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