Tokyo [Japan], August 30: The Japanese government has downgraded its assessment of corporate earnings, citing stagnation caused by the impact of higher US tariffs on automakers and other manufacturers.
In its monthly economic report for August, the Cabinet Office, however, maintained its overall view that the domestic economy is 'recovering at a moderate pace,' supported by strong business investment, particularly in digitalisation among non-manufacturers.
"The effects caused from the US trade policies and so on are seen in some areas," the office said, as it lowered its evaluation of corporate earnings for the first time in eight months, adding the impact on corporate investment and employment should be closely monitored.
Last month, the report said profits were improving, though "attention should be given to the effects of trade issues."
Japan agreed in late July on 15 percent tariffs for cars and other products imported by the United States.
So-called reciprocal tariffs took effect on Aug. 7 without Japan being granted an exemption from tariff stacking, meaning the United States would add a country-specific rate on top of pre-existing duties. After admitting that the related presidential executive order was erroneous, the U.S. government said it would refund any excess duties collected due to the mistake.
Under the agreement, US tariffs were cut to 15 percent from the current 27.5 percent for cars and auto parts from Japan. However, when the lower rate will take effect remains unclear.
The office said exports were 'almost flat,' leaving its assessment unchanged from the July report.
Its evaluation of private consumption, which accounts for more than half of Japan's economy, was also maintained, though the report noted that 'the improvement in consumer sentiment is slow.'
Among other components, the office's assessment of public investment was upgraded while that for housing construction was lowered.
Source: Emirates News Agency
