MNI BRIEF: BOJ Sees Mixed U.S. Trade Policy Impacts

Bank of Japan branch managers reported mixed views on how U.S. trade policy is affecting capital investment, price-setting, and production, according to the BOJ’s regional economic report released Thursday.

“Capital investment to increase capacity will be postponed for a half year” due to heightened uncertainties caused by the trade policy, an electric machinery firm said.

An automobile-related firm said it is reviewing capex and proceeding with cost cuts as profits are set to fall due to the tariffs, while a chemical firm noted it would implement capital investment as planned, despite high uncertainties.

A production machinery firm said price hikes caused by the tariffs were accepted by U.S. customers and that the impact on export volumes was limited. However, another production machinery firm said it would transfer the higher costs from tariffs to all retail prices to protect profits, but some U.S. customers had refused to accept the higher prices.

A separate production machinery firm reported revising down its production plan as U.S. customers reduce capital expenditure, while a transportation firm said it would not raise overseas sales prices as exports were currently increasing.

Meanwhile, many smaller firms are struggling to assess the trade policy’s impact, with concerns over future business prospects expanding.