Japan Inc. in the Crosshairs: Trump Tariffs Shake Global Trade

As President Trump's tariffs impact Japan Inc., major exporters like Toyota and Sony reveal mixed outcomes. These levies challenge business predictions amid uncertainty over tariff timelines. The semiconductor sector faces a blow, but companies with U.S. expansion plans experience positive stock movements.

The imposition of tariffs by U.S. President Donald Trump is creating divisions within Japan Inc., with significant exporters like Toyota modifying their profit expectations while Sony and Honda report a lesser impact than anticipated.

Trump's tariff measures on global shipments to the U.S. commenced on Thursday, prompting a diverse response from Japan's leading firms.

While some companies show optimism, others remain anxious about prospective changes in tariffs, particularly those affecting automobiles, pharmaceuticals, and semiconductors.

The tariff uncertainty has generated global apprehension, leading governments to negotiate fervently in hopes of circumventing crises for key exporters.

In a new development, several Japanese semiconductor firms were hit hard by Trump's 100% tariff on select chip imports to the U.S., adversely affecting supply chains. On the other hand, firms with U.S. expansion plans experienced a boost, as seen with stock increases.

On Thursday, Tokyo officials urged Washington to promptly execute a bilateral accord from last month, meant to reduce tariffs on Japanese automobiles imported to the U.S. to 15% from 27.5%. The agreement also encompasses $550 billion in Japanese investments and loans within the U.S.

This deal, announced two weeks earlier by Trump, left Tokyo scrambling to decipher essential details, complicating planning for major commercial entities.

Takanori Azuma, Toyota's head of finance, described the current market environment as unpredictable, resulting in the automaker lowering its operational profit estimate for the fiscal year ending in March by 16% to 3.2 trillion yen ($21.7 billion).

Despite the tariffs, Toyota commits to sustaining vehicle production for U.S. consumers, observing low incentives and limited inventories, affecting markets in both the U.S. and Japan.

In a contrasting scenario, Sony revised its annual profit forecast upwards by 4% to 1.33 trillion yen ($9 billion), with anticipated tariff impacts decreasing.

Companies like Subaru also note the significant yet reduced tariff impacts on their products.

While Toyota shares fell, Sony observed a notable rise, reflecting varying industry responses to the tariffs.

Concerning semiconductor tariffs, exemptions were made for firms manufacturing in, or committed to producing in, the U.S. However, Japan's chip industry has yet to make substantial U.S. investments.

Meanwhile, Japanese chip-related stocks fell, and firms with robust U.S. expansion plans, like Taiwan's TSMC, soared.

Dealer Nissan and carmaker Isuzu are under pressure regarding pricing strategy during the trade conflict, while shares of Toyota and Honda react differently to the changing tariffs.

(With inputs from agencies.)