Japanese Liberal Democratic Party officials criticize U.S. tariffs as "chaotic," Japan prepares for trade turbulence

Investing.com – A senior leader of Japan’s ruling Liberal Democratic Party (LDP) expressed skepticism about Washington’s escalating trade tensions, stating that the current U.S. tariff environment is “a complete mess.”

On Sunday, LDP Tax System Research Committee Chairman Goto Onodera warned that recent Supreme Court rulings and subsequent retaliatory tariff hikes implemented by President Trump have pushed the benchmark tariffs up to 15%, creating an extremely uncertain environment for Japanese exporters.

Despite the turbulent situation, Tokyo has indicated it will adopt a cautious “wait-and-see” approach rather than rushing to the negotiating table. Onodera explicitly ruled out the possibility of a comprehensive renegotiation of the existing bilateral trade agreement.

His main focus is on protecting the automotive sector, Japan’s largest export engine. Last year’s agreement successfully reduced auto tariffs from 27.5% to 15%. Officials are concerned that any attempt to restart negotiations amid the current “chaos” could lead the White House to raise these tariffs again.

Upgrade to InvestingPro for more insights – now with up to 50% discount

Protecting Japan’s core automotive industry and $550 billion in investments

Japan’s interests are tied to its commitment to invest $550 billion in the U.S., a move made in exchange for lower trade barriers. Just this week, the Trump administration announced the first batch of these projects, including a data infrastructure center in the U.S. and a semiconductor-grade synthetic diamond factory.

However, Onodera warned that if domestic instability in the U.S. continues, this capital flow cannot be guaranteed. He cautioned that if the “chaotic” trade environment persists, Japanese companies might start shifting their investments away from the U.S. market.

For investors, the current focus is on how this instability could impact the profits of major Japanese manufacturers like Toyota and Honda. While these companies will naturally seek to recover tariffs recently deemed illegal by the U.S. Supreme Court, Onodera pointed out that such recoveries could be trapped in lengthy legal battles.

Geopolitical risks ahead of the Washington summit

This diplomatic tension comes at a delicate moment for Prime Minister Sanae Suga, who plans to meet President Trump in Washington next month. The summit was originally intended to reaffirm that the trade agreement remains on track, but the recent surge in tariff rates over the past 48 hours has shifted the agenda toward crisis management.

Suga now must balance the need to support Japan’s industries with the necessity of maintaining stable relations with Japan’s most critical security ally. Market participants are watching to see if Tokyo will show any signs of a “firm response,” although current Liberal Democratic Party statements suggest they are more inclined to de-escalate.

Simon Mugo reporting

This article was translated with the assistance of artificial intelligence. For more information, see our Terms of Use.