Incoming U.S. President Donald Trump may impose tariffs on Japanese cars exported to the United States, Stefan Angrick, a senior economist at Moody's Analytics, said in a recent interview.
Angrick warned that this poses a huge risk to the Japanese economy.
During his presidential campaign, Trump vowed to impose blanket tariffs of 10% to 20% on all imported goods. Given the U.S. trade deficit, he may focus attention on Japanese auto exports.
Still, Angrick said that such tariffs are unlikely to be realized as they could fuel inflation in the United States. Noting that Japan is the world's largest investor in the United States, he predicted that possible tariff hikes would be limited if Japanese automakers promise to expand investment and shift production to the United States.
Meanwhile, the economist expressed concern about a resumption of the tit-for-tat tariff war between the United States and China, as officials in the new U.S. administration are expected to include hardliners against China, adding that it would inevitably hit the Japanese economy.
If tariffs push up import prices and reignite inflation in the United States, the Federal Reserve would be forced to keep interest rates high, Angrick pointed out. In that case, the Bank of Japan would have to accelerate the pace of rate hikes, he noted.
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