Bank of Japan Governor Kazuo Ueda issued a stark warning on Wednesday, cautioning that the U.S.’s planned new tariffs could significantly disrupt world trade and potentially slow global economic growth. His comments came just hours before President Donald Trump is expected to unveil reciprocal tariffs on various goods.
These new tariffs would add to existing U.S. levies on aluminum and steel imports and the increased duties on Chinese goods. Despite previous threats, Trump has yet to impose a wider range of tariffs, though the latest plans appear imminent.
Speaking to Japan’s parliament, Ueda emphasized the unpredictability of the impact these tariffs could have, particularly given their potential to strain trade relations and alter economic activities across multiple countries. “The effect of U.S. tariff policies on the global economy is highly uncertain,” Ueda remarked. “However, depending on the scope and scale of these measures, they could significantly disrupt trade flows and affect economic sentiment.”
Ueda also expressed concerns over the potential long-term consequences for both businesses and consumers. “A major question is how these tariffs will influence the behavior of households and companies, in terms of sentiment and spending,” he said.
While the short-term effect of higher tariffs may drive inflation in the U.S., Ueda noted that the longer-term effects remain uncertain. He speculated that the tariffs could dampen U.S. economic growth, which might eventually stabilize price increases.
The White House has confirmed that Trump will announce global reciprocal tariffs, which are expected to take effect immediately. Additionally, a 25% tariff on auto imports will come into force on April 3.
Recent global surveys have shown a sharp downturn in factory activity in March, from Japan to the U.S. and Britain, as businesses prepare for the anticipated tariffs.
The ongoing U.S. trade restrictions are expected to dominate discussions at the upcoming spring meetings of the International Monetary Fund (IMF) and G20 finance leaders, set to take place later this month in Washington.
While it remains unconfirmed whether Ueda will attend the G20 meetings, Japan’s finance minister and the BOJ governor typically participate in these high-level discussions.
Analysts are also keeping a close eye on how U.S. tariffs might affect Japan’s economy, as the Bank of Japan’s monetary policy decisions hinge on global economic stability. The BOJ is set to hold a policy meeting from April 30 to May 1, with many analysts forecasting that a rate hike could occur as early as July.
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