Nearly 90% of Japanese businesses anticipate negative fallout from U.S. President Donald Trump’s policies, according to a Reuters survey, underscoring mounting concerns from the world’s fourth-largest economy. As Japan remains a critical investor in the U.S. and heavily dependent on China for trade and manufacturing, the prospect of rising tariffs and escalating trade disputes is casting a long shadow over corporate strategy.

Majority Of Firms See Business Climate Worsening

In a survey conducted by Nikkei Research for Reuters between February 4 and February 14, 86% of Japanese firms reported that Trump’s policies would harm their business environment, compared to just 73% who expressed similar concerns in December. The findings signal growing unease over protectionist measures and geopolitical tensions.

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Of the companies voicing concerns, 72% pointed to Trump’s aggressive trade stance—particularly his push for higher tariffs—as the biggest threat, while 26% cited worsening U.S.-China relations as a key risk factor.

Tariffs Loom Large Over Japanese Industry

Trump’s tariff-heavy approach to trade has already left its mark. His administration has imposed a 25% tariff on steel and aluminum imports, slapped a 10% duty on Chinese goods, and threatened hefty levies on Canada and Mexico. Plans for reciprocal tariffs targeting countries that impose duties on U.S. exports add another layer of uncertainty.

While Japan does not tax foreign car imports, Washington has long argued that non-tariff barriers hinder U.S. automakers’ access to the Japanese market. In a fresh warning on February 20, Trump suggested auto imports could face a 25% tariff as early as April, sparking fears of widespread economic ripple effects.

“If global auto tariffs take hold, semiconductor sales could also take a hit,” cautioned an executive from a Japanese electronics firm, highlighting potential collateral damage to key industries.

Deregulation And Energy Policy Find Some Support

Not all respondents viewed Trump’s policies as entirely negative. Among those who saw potential benefits, 37% pointed to deregulation and tax cuts, while an equal percentage cited his support for fossil fuel production as a positive for business.

Despite broader concerns, 80% of surveyed companies said they had no immediate plans to alter their U.S. investment strategies, though 16% signaled a more cautious approach. During a recent meeting with Japanese Prime Minister Shigeru Ishiba, Trump encouraged Japan to pour more capital into U.S. energy and technology sectors. The discussions also touched on Nippon Steel’s $14.9 billion bid for U.S. Steel, with Trump suggesting the deal might transition from an outright acquisition to an investment.

Japan’s Interest Rate Hike Sparks Debate

The survey also gauged corporate sentiment on the Bank of Japan’s (BOJ) recent rate increase. While 61% of respondents supported the move, 25% believed it was premature, and 15% thought it came too late.

In January, the BOJ raised rates from 0.25% to 0.5%, citing progress toward its 2% inflation target. Some business leaders expressed concerns about the prolonged weakness of the yen, with one wholesale executive arguing that further hikes were needed to curb capital outflows.

Looking ahead, 24% of companies expect the next rate hike between July and September, while another 24% favor waiting until 2026 or later. Meanwhile, an equal percentage said no further rate increases should happen at all.

BOJ board member Naoki Tamura recently pushed for raising rates to at least 1% in the second half of the upcoming fiscal year, a move that has left businesses divided. While 44% of firms warned that a 1% interest rate could dent capital spending, 21% said the threshold for concern would be 1.5% or higher.

As Japan navigates trade tensions, monetary policy shifts, and global economic uncertainty, its corporate leaders face a challenging road ahead—one defined by caution, adaptation, and resilience.