**Tokyo**: In response to potential US tariffs under the Trump administration, companies like Sony and Suntory are increasing their US inventories. This strategic shift reflects growing fears over trade impacts on Japan’s economy, as firms reconsider production locations and supply chains in light of tariff risks.
Japanese electronics manufacturer Sony and beverage producer Suntory are strategically increasing their inventories in the United States amid growing concerns regarding potential tariffs from the Trump administration. The move comes as U.S. President Donald Trump hinted at targeting Japan with new tariff barriers, following earlier actions against trade partners such as Mexico and China. These tariffs could significantly impact Japan’s export-driven economy, which is the world’s fourth largest.
Industry analysts note the potential ramifications for Japanese businesses, particularly after Honda opted to manufacture a new model of one of its best-selling vehicles in the U.S., rather than in Mexico. This decision forms part of a broader trend, as companies such as Japan Display, a major supplier of LCD screens, are contemplating relocating production to the U.S. to mitigate tariff risks.
Norihiro Yamaguchi, a senior economist at Oxford Economics, emphasised the heightened awareness among corporations regarding the potential for Japan to become a target for tariffs. He referenced Trump’s statements about employing tariffs to counteract disadvantages posed by currency valuation practices in Japan and China. The situation poses a considerable threat to Japanese firms, which have traditionally relied on exports to combat stagnant domestic demand and a declining population.
Recent findings from a Reuters survey indicate that nearly 90% of Japanese companies anticipate adverse effects from Trump’s trade policies. Of those, 72% identified the imposition of tariffs as the primary concern, whereas 26% highlighted trade tensions between the U.S. and China as a significant issue. In the context of a potential trade war, the Daiwa Institute of Research has projected that Japan’s economy could experience a 1.4% contraction over two to three years.
In response to these trade uncertainties, over 300 Japanese firms, not currently operating in the U.S., have expressed intentions to establish a presence there. This survey conducted by Japan’s export-promotion agency JETRO shows a marked increase from previous years. Hirotoshi Ito, an official involved in the survey, noted that concerns regarding future U.S. tariff policies were a recurring theme in interviews with businesses.
Sony has begun proactively addressing the tariff threat by amassing inventory across its gaming and electronics divisions in the U.S. President Hiroki Totoki confirmed this strategy during a press conference, although specifics were not disclosed. Similarly, Suntory has prepared for impending tariffs by transferring tequila from its Mexican brands to the U.S. in anticipation of a 25% tariff imposed by the Trump administration. A spokesperson for Suntory indicated plans to shift sales of Scotch whiskies to Europe while increasing the sale of American whiskey domestically to counteract the potential fallout from tariff skirmishes.
In addition to stockpiling, some companies are considering moving their supply chains to avoid tariffs altogether. Alps Alpine, a key supplier to Apple, has plans to bring some production back to Japan to shield its operations from tariff impacts on third-party manufacturing locations. Another Apple supplier, Murata Manufacturing, is implementing a “double-track” strategy, focusing on producing items in China for local customers and shipping products globally from facilities in Japan and Thailand.
The evolving trade landscape is also influencing the recruitment sector, with a rising demand for tax managers and auditors as companies seek to navigate the complexities of changing tariffs. Grant Torrens, Japan head for recruitment firm Hays, observed a cautious approach among export-focused clients towards hiring, as firms weigh broader strategic shifts, including potential relocations of production facilities to the U.S.
As companies adjust their strategies in response to the evolving tariff situation, the future of Japan’s economy and its significant trade relationships remains uncertain, amidst a backdrop of escalating global trade tensions.
Source: Noah Wire Services
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