Japan doubles down on stimulus to counter effects of Trump tariffs
- Hge News
- Apr 25
- 3 min read
Japan has upped the pace on stimulus measures to address the potential economic fallout from U.S. President Donald Trump’s new tariffs, with policy details announced Friday for boosting domestic spending and shoring up corporate balance sheets.
Five areas of focus were outlined in the emergency stimulus package: strengthening the consultation framework for affected businesses, assisting companies with their cash flows, ensuring employment retention, stimulating consumption and enhancing industrial competitiveness.
In a ministerial meeting on tariff responses on Friday morning, Prime Minister Shigeru Ishiba instructed ministers to get ahead of potential problems and ensure effective implementation of the policies.
“I would like all relevant ministers to work closely with the affected industries and proactively communicate to U.S. stakeholders about Japan’s efforts in investment and job creation within the United States,” he said.
The latest package was built upon stimulus policies from earlier this month, which included setting up over 1,000 consultation desks for businesses worried about the effects of tariffs, lowering requirements for public loans and subsidies, and expanding insurance coverage for trade losses resulting from the tariffs.
In addition to the ongoing relaxation of requirements for public loans, the government said it will consider lowering the interest rate on the public safety net loans for affected businesses from May if the impact from the current tariff measures is forecast to worsen or become prolonged.
It will also prepare policies for more flexibility on tax payments, offering subsidies for electricity and gas using grant money allocated for local municipalities.
The stimulus package underscores measures to curb rising prices and stimulate personal consumption. A ¥1.2 trillion ($8.4 billion) income tax reduction was already included in this fiscal year’s budget after heavy back-and-forth in parliament.
Ishiba announced on Tuesday that the government will temporarily lower gasoline prices by ¥10 per liter from May 22. This was included in the stimulus package announced on Friday.
The price reduction will take place gradually and will not result in an immediate drop in prices at the pump on the start date, said economy minister Yoji Muto at a news conference Friday morning. This is to avoid disruption in distribution and take into account existing stock at gas stations, he explained.
Similarly, subsidies will be applied to electricity and gas bills starting in July and running through September, when electricity usage increases due to the hot weather.
The latest stimulus package came after political leaders expressed concern about the U.S. tariffs and called for government action.
The ruling Liberal Democratic Party and its coalition partner, Komeito, submitted separate policy proposals to the prime minister over the past week, in which they asked the government to provide better support for smaller businesses and help in increasing households' disposable income.
Ryosei Akazawa, Japan’s top tariff negotiator and the minister overseeing economic and fiscal policy, said the government might utilize a reserve fund outlined in the existing fiscal budget if more is needed to cushion the impact of the Trump tariffs, but it is not considering a supplementary budget at this moment.
“Our basic stance is to continue closely monitoring the state of discussions with the United States and the impact of the tariff measures on people's daily lives,” he said. “We are prepared to respond swiftly and decisively as needed.”
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