If Daiwa Institute of Research is correct, Trump's trade war will reduce Japan's real GDP this year by 0.6% from what it would have been, and, in 2029, by virtually 3% compared to what it would have been. If so, then the Trump tariffs will erase three-quarters of the growth that the IMF had predicted for Japan over the coming five years. Daiwa's calculation includes the impact of the tariffs on Japan itself plus the indirect effects on Japan's exports  of reduced growth in China and other purchasers of Japan's exports. And none of this includes what might happen if we enter a spiral of retaliation and counter-retaliations. China just announced 34% tariffs on all imports from the US.

If you think Japan will suffer, consider how much harm Trump inflicts on America itself, according to a forecast from Japan's Institute of Developing Economies (IDE). In a report released before the April 2^nd announcement, the IDE projected that the Trump tariffs on autos, steel, China, etc., would subtract 0.6% from what global GDP was expected to be in 2027. However, it would subtract 2.7% from America's own GDP in 2027. That's a recession-sized drop. Meanwhile, JP Morgan just raised the likelihood of a US recession this year to 60%.

These moves should  shatter any remaining illusions in Tokyo that Trump was a rational businessman who would do what was best for the US economy.

For details, see https://richardkatz.substack.com/p/trump-trade-war-predicted-to-decimate

Richard Katz

The Contest for Japan's Economic Future

https://tinyurl.com/3y5ue9tj