Takako Masai, a former executive director at the Bank of Japan (BOJ), has issued a stark warning that potential U.S. tariff measures under President Trump could prematurely end Japan’s interest rate tightening cycle. Masai cited anticipated negative impacts on key economic drivers if tariffs are implemented.
The core concern centers on significant declines in Japanese export volumes triggered by U.S. trade policies. The resulting unpredictability is already disrupting global markets and is expected to harm Japan’s export sector, industrial production, wage progression, and overall consumer spending.
Of particular concern is the U.S. consideration of tariffs on automobiles, posing a grave threat to Japan’s economy given the sector’s critical importance. Masai estimates the full economic fallout from such tariffs could become apparent by 2026, typically emerging within six to twelve months of implementation.
This challenging international trade environment presents substantial headwinds for Japanese monetary policy. Masai cautioned that prolonged constraints on the BOJ’s ability to pursue further monetary tightening are likely due to the potential damage caused by escalating trade tensions with the U.S.