Most Japan Firms See No Need to Follow the US with Tariffs on China

A businessman walks in Tokyo's business district, Japan·Reuters
A businessman walks in Tokyo's business district, Japan·Reuters
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Most Japan Firms See No Need to Follow the US with Tariffs on China

A businessman walks in Tokyo's business district, Japan·Reuters
A businessman walks in Tokyo's business district, Japan·Reuters

Most Japanese companies see no need for their government to follow the US in raising tariffs on Chinese imports, saying excessive production capacity in China's industrial sector does not affect them, a Reuters survey showed on Thursday.

US President Joe Biden last month unveiled steep tariff increases on an array of Chinese goods including electric vehicles, batteries and semiconductors, criticizing Beijing for generous subsidies and policies that he said help flood global markets with cheap goods.

The European Union has also slapped hefty duties on EV imports and the Group of Seven major economies, which includes Japan, last week echoed concerns about what they called harmful non-market practices by China.

But 61% of respondents to the survey, conducted June 5-14, said there was no need for Japan to embark on similar measures. The rest said Japan should. Around 53% said China's excessive production capacity had little to no impact on their business, Reuters reported.

"It could lead to an escalation in measures and countermeasures against each other and economic conditions will get worse," a manager at a chemical company wrote in the comment section of the poll.

In response to the tariffs, China has accused the United States of subverting its own free trade principles and has said the G7 statement lacks factual basis.

The survey of 492 companies was conducted for Reuters by Nikkei Research, with firms responding on condition of anonymity. Roughly 230 companies responded.

The companies were also asked whether they think a pledge by Prime Minister Fumio Kishida to have wages consistently climb faster than inflation was attainable but only 7% did.

"I'm afraid there are many mid-sized and small companies that just can't make ends meet if they implement wage hikes that keep pace with inflation," a manager at a wholesale company wrote.

Half said the goal was not attainable while 43% said it was hard to tell.

As a temporary measure to cushion the economic blow from rising inflation, Kishida's government is cutting annual income tax by 30,000 yen ($190) and the residential tax by 10,000 yen for each taxpaying citizen who can also claim the same amount in tax breaks for dependents and a spouse with limited income.

But 69% of the companies in the poll saw the measure as having little or no effect in stimulating consumer spending.

On domestic politics, 54% of the companies expect Kishida to be replaced as prime minister by the end of the year in the wake of a fund-raising scandal.

The ruling Liberal Democratic Party (LDP) has said more than 80 of its lawmakers received proceeds from fund-raising events that were kept off the books. Prosecutors have indicted three lawmakers.

An Asahi newspaper poll conducted last week showed support for Kishida's government fell to 22%, down 2 percentage points from a month ago and the lowest since he took office in October 2021.

Former Defense Minister Shigeru Ishiba was corporate Japan's top choice for the country's next leader, with 24% of firms deeming him a suitable successor. Economic Security Minister Sanae Takaichi was next with 14%.

A security maven, Ishiba regularly ranks high in voter surveys on future prime ministers but is less popular with fellow LDP lawmakers whose backing is necessary to win the party's leadership election.

About 80% of companies said they want the LDP and junior coalition partner Komeito to remain in power if Kishida calls a snap election this year.

If the coalition government were to lose power, "I fear that political confusion might develop into economic confusion and the weakening of Japan's competitiveness," a manager at a food company wrote.

Only 6% of the companies surveyed wanted a government led by the Constitutional Democratic Party of Japan, currently the largest opposition party.



G7 Glosses over Tariffs, Pledges to Cut Global Economic Imbalances 

Canada's Finance Minister Francois-Philippe Champagne, center right, and Governor of the Bank of Canada Tiff Macklem, center left, pose for a family photo with their colleagues at the G7 Finance Ministers meeting in Banff, Alta., Wednesday, May 21, 2025. (Jeff McIntosh /The Canadian Press via AP)
Canada's Finance Minister Francois-Philippe Champagne, center right, and Governor of the Bank of Canada Tiff Macklem, center left, pose for a family photo with their colleagues at the G7 Finance Ministers meeting in Banff, Alta., Wednesday, May 21, 2025. (Jeff McIntosh /The Canadian Press via AP)
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G7 Glosses over Tariffs, Pledges to Cut Global Economic Imbalances 

Canada's Finance Minister Francois-Philippe Champagne, center right, and Governor of the Bank of Canada Tiff Macklem, center left, pose for a family photo with their colleagues at the G7 Finance Ministers meeting in Banff, Alta., Wednesday, May 21, 2025. (Jeff McIntosh /The Canadian Press via AP)
Canada's Finance Minister Francois-Philippe Champagne, center right, and Governor of the Bank of Canada Tiff Macklem, center left, pose for a family photo with their colleagues at the G7 Finance Ministers meeting in Banff, Alta., Wednesday, May 21, 2025. (Jeff McIntosh /The Canadian Press via AP)

Finance ministers and central bank governors from the Group of Seven democracies papered over their differences on Thursday, pledging to tackle "excessive imbalances" in the global economy and saying they could increase sanctions on Russia.

There had been doubt before the meeting whether it would issue a final communique, in light of divisions over US tariffs and Washington's reluctance to refer to Russia's war on Ukraine as illegal.

But after three days of talks, participants signed on to a lengthy document devoid of previous language on fighting climate change and which also softened references to the Ukraine war.

"We found common ground on the most pressing global issues that we face," Canadian Finance Minister Francois-Philippe Champagne told the closing press conference.

"I think it sends a very clear signal to the world ... that the G7 is united in purpose and in action."

The officials, who met in the Canadian Rocky Mountains, called for a common understanding of how "non-market policies and practices" undermine international economic security.

The document did not name China, but references by the United States and other G7 economies to non-market policies and practices are often targeted at its state subsidies and export-driven economic model.

The G7 statement omitted mention of US President Donald Trump's tariffs that are disrupting global trade and supply chains and swelling economic uncertainty.

Champagne downplayed the lack of communique language on tariffs, but said ministers "were not skating around" the issue and had discussed its impact. Canada seeks a deal to eliminate Trump's tariffs of 25% on many goods, such as steel and aluminum.

"We're trying to enhance growth and stability," he added. "And obviously tariffs are something in that context that you can't avoid discussing."

The gathering sets the stage for a summit of G7 leaders from June 15 to 17 in the nearby mountain resort area of Kananaskis. Trump will attend the summit, the White House confirmed on Thursday.

The G7 communique called for an analysis of market concentration and international supply chain resilience.

"We agree on the importance of a level playing field and taking a broadly coordinated approach to address the harm caused by those who do not abide by the same rules and lack transparency," the grouping said.

It also recognized an increase in low-value international "de minimis" package shipments that can overwhelm customs and tax collection systems and be used for smuggling drugs and other illicit goods.

The duty-free exemption for packages of value less than $800 has been exploited by Chinese e-commerce companies, such as Shein and Temu.

The Chinese embassy in Ottawa said it could not immediately comment on the G7 statement.

'BRUTAL' WAR

The G7 finance chiefs condemned what they called Russia's "continued brutal war" against Ukraine and said if ceasefire efforts failed, they would explore all possible options, including "further ramping up sanctions."

The description of the Ukraine war was watered down from October's G7 statement, before Trump's re-election, calling it an "illegal, unjustifiable, and unprovoked war of aggression against Ukraine."

Trump has diminished US support for Ukraine and suggested that Kyiv was to blame for the conflict as he tries to coax Russia into peace talks.

But the G7 ministers pledged to work together to ensure no countries that financed the Russian war would be eligible to benefit from the reconstruction of Ukraine.

"That's a very big statement," said Champagne, calling it a fundamental pillar of the communique. It did not name China or other countries the West has accused of supplying critical components to Russia in defiance of sanctions.

Russia's sovereign assets in G7 jurisdictions would remain immobilized until Moscow ended the war and paid for the damage it has caused to Ukraine, the communique said.

European Commission Executive Vice President Valdis Dombrovskis said the G7 ministers discussed a proposal to lower the G7-led price cap of $60 a barrel on Russian oil exports, since Russian crude is now selling below that.

But the plan was not mentioned in the communique, partly because US Treasury Secretary Scott Bessent was not convinced it was needed, a European official said.

Brent crude currently trades around $64 per barrel.

A European official said the United States is "not convinced" about lowering the Russian oil price cap.

A US Treasury spokesperson said only that Bessent's G7 engagements "were both pleasant and constructive, and we look forward to our future engagements with all of our G7 partners on issues of mutual interest."

Bessent came to Banff to the relief of many participants after he skipped a G20 finance meeting in February in the South African city of Cape Town.

G7 officials described his interactions as "constructive" and "flexible" and said some initial stiffness gave way to jokes over dinner.

"We had a feeling that it was a discussion between friends and allies," a French official said.

But Bessent took an unusually low profile for a US Treasury secretary at the G7 meeting, holding no news conference and largely operating out of sight of the press.

"I had a very productive day," he told a reporter on Wednesday, in his only public comment to the media.