Economy Japan Inc. and Trump 2.0

Though Trump's initial 2017-2021 trade war was largely aimed at China, Japan arguably suffered the worst collateral damage. One of Trump's first major acts in 2017 was unilaterally withdrawing from the Trans-Pacific Partnership trade pact, leaving Japan in a tight spot vis-à-vis China. The U.S.-led TPP was aimed at curbing China's economic dominance. Trump 2.0 could be far more calamitous for Asia's second-biggest economy. One reason is that Japan Inc. isn't in a great place as 2025 approaches. For example, Japan's 2.4% inflation rate is outpacing average wage gains at a moment of decelerating national growth. The yen is sliding again, upping the risks that Japan will import more inflation via elevated energy and food prices. These are the pre-existing conditions that Japan will carry into the Trump 2.0 era and the ginormous trade wars sure to shake Asia's economic foundations.

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That's a bigger problem than usual, as Trump 2.0 makes giant trade wars great again. If there's any silver lining here, it's that Trump's policies will catalyze Japan to become more self-reliant. Its $4.2 trillion economy is still too dependent on exports for comfort. Trump's return may light a fire under Japanese bureaucrats to accelerate efforts to increase the role of domestic consumption in driving growth. There's not a moment for Ishiba's new government to waste, particularly if he, too, only gets one year in office. Topping his to-do list are moves to reduce bureaucracy, loosen labour markets, incentivize greater innovation and productivity, empower women and convince global investors to rediscover Tokyo stocks that fresh upgrades are underway.

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However, the potential effect of Trump's policies on relationships between other countries is much less discussed. In the absence of US trade and security guarantees during Trump's first term, regional rivals China and Japan entered a detente, a period of thawing relations. With Trump's second term on the horizon, will relations between China and Japan again thaw? The Chinese-Japanese relationship is an example of "hot economics, cold politics." This term, which originated in the early 2000s to describe the distinctive relationship between these two countries, still holds today. Over the next decade, China and Japan have agreed to cooperate on an estimated $26 trillion of regional infrastructure projects. In 2021, trade between China and Japan edged above US$372 billion. Japan now serves as China's second-largest trade partner, behind only the US, with China serving as Japan's largest trading partner. Yet political animosity is a source of continuing tension. Japan's invasion of China during the Second World War, in which over 20 million Chinese people died, has left an enduring legacy. Anti-Japanese sentiment is a core characteristic of contemporary Chinese nationalism, which routinely calls for vigilance against what it considers to be an inherently militaristic Japanese culture.[/center]

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thomas said:

Trump pledged to impose 60% tariffs on China and perhaps a 20% blanket across-the-board levy on all goods globally.

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salyavin said:

I agree, Trump says and tweets many things but it is not clear what he will actually do. I was just telling my wife that yesterday. Tariffs making things more expensive especially the vast number of things not made in the US is just not likely and would lead to a lot of anger from his own base.

One he said that may be convenient is Trump wants to end the 'double taxation' of Americans living overseas. What could change if it removes having to do tax paperwork while abroad as a US citizen. We are not quite sure what he means. Most US citizens abroad are not double taxed.

"The real problem for U.S. citizens living abroad is the administrative burdens of filing a U.S. tax return to do these calculations," says Luscombe. "It is not clear what the Trump campaign is proposing, whether it is to cease U.S. taxation of U.S. citizens living abroad except on their income from U.S. sources, or some more limited steps to try to address compliance burdens."

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musicisgood said:

Try opening a bank account without a US Social Security Number and your employer needs its also. I know, I've had to do it.

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The Supreme Court ruled Friday that President Trump exceeded his authority when he imposed sweeping tariffs on imports from nearly every U.S. trading partner, a major setback for his administration's second-term agenda. The court's 6-3 decision has significant implications for the U.S. economy, consumers and the president's trade policy. The Trump administration had said that a loss at the Supreme Court could force the government to unwind trade deals with other countries and potentially pay hefty refunds to importers. Mr Trump is the first president to claim that a 1970s emergency statute, which does not mention the word "tariffs," allowed him to impose the duties unilaterally without congressional approval. Chief Justice John G. Roberts Jr. said the statute does not authorise the president to impose tariffs. "The president asserts the extraordinary power to unilaterally impose tariffs of unlimited amount, duration, and scope. In light of the breadth, history, and constitutional context of that asserted authority, he must identify clear congressional authorisation to exercise it," the chief justice wrote.

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thomas said:

Does this render all the tariff agreements nil and void? Will Japan still be committed to its 550bn USD "investment deal"?

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Ukigumo said:

Trump's a d*ck!

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