Bank of Japan Warns U.S. Tariffs Could Slow Global Growth

Image Credit: Reuters

Bank of Japan Governor Kazuo Ueda expressed concerns on Wednesday about the potential impact of planned new U.S. tariffs on global trade, warning that they could harm global growth. This statement came just hours before President Donald Trump was expected to announce reciprocal tariffs.

These new tariffs would add to existing U.S. duties on aluminum and steel imports, as well as increased tariffs on Chinese goods. While Trump has previously threatened additional tariffs, many of these threats have been canceled or delayed. Ueda stated that he intends to discuss with other G20 counterparts the potential global economic effects of higher U.S. tariffs during a meeting of finance leaders in Washington later this month.

"The impact of U.S. tariff policy on the global economy is highly uncertain," Ueda told Japan's parliament. "However, depending on their extent, U.S. tariffs could significantly affect trade activities in other countries."

He also highlighted concerns over how these tariffs might influence the spending and sentiment of households and businesses. 

While the tariffs may cause a short-term rise in U.S. inflation, Ueda noted that the longer-term effects remain unclear, as the higher duties could slow U.S. economic growth and reduce inflationary pressures.

The White House has indicated that the new tariffs, including a 25% tariff on auto imports starting April 3, will take effect immediately. 

Global surveys have shown that March saw a decline in factory activity worldwide, from Japan to the U.S. and Britain, as businesses anticipated the new tariffs. 

These developments, particularly the fallout from U.S. trade restrictions, are expected to be a major topic at the upcoming spring IMF and G20 meetings. 

Although the BOJ has not confirmed whether Ueda will attend the G20 meetings, it is typical for both the BOJ governor and Japan's finance minister to participate.

Analysts believe that the impact of U.S. tariffs on Japan's economy could influence when the BOJ decides to raise interest rates. The BOJ's next policy meeting is scheduled for April 30 to May 1, with many analysts predicting a rate hike in the third quarter, most likely in July.

 

 

 

Paraphrasing text from "Reuters" all rights reserved by the original author