Uncertainty is spreading in Japanese business circles after Donald Trump was elected president of the United States because the businessman has repeatedly expressed protectionist views, accusing Japan of benefiting from a weak yen and standing against the Trans-Pacific Partnership (TPP) free trade initiative.
During his election campaign, however, Trump retracted his excessive remarks on many occasions. Therefore, Japanese business leaders are hoping that Trump will switch to realistic policies after taking office.
Akio Mimura, chairman of the Japan Chamber of Commerce and Industry, said in a statement on Nov. 9, "The rise of protectionism and anti-globalization could invite stagnation of economic activity. I hope new president Trump will make realistic decisions." Statements issued by business leaders in response to election results at home and abroad generally contain innocuous complements. But Mimura issued such a harsh statement because "the economic uncertainty caused by Trump's victory is so huge," said a senior official of a major electronics company.
Trump had described Japanese Prime Minister Shinzo Abe as a "killer" who he said was driving down the yen to snatch jobs in the Unites States and insisted that he would build a "great wall" along the U.S.-Mexico border. Market players, therefore, became keenly conscious of protectionist policies that could be taken by president Trump, sending the yen rising sharply against the U.S. dollar in the foreign exchange market. A one yen rise against the dollar, for example, slashes the profit of Toyota Motor Corp. by 40 billion yen a year, 14 billion yen for Nissan Motor Co. and 2 billion yen for Hitachi Ltd. After Trump's election victory, it became difficult to predict market reaction. A senior official of a major automaker said in reference to Japan's export industry, "Operating revenues could be affected in the current business year."
Trump went beyond opposing the TPP free trade initiative to insist that he would immediately renegotiate provisions of the North American Free Trade Agreement (NAFTA), which the U.S. has with Mexico and other countries. He also hinted at withdrawing the U.S. from NAFTA. Many Japanese companies such as Nissan and Mazda Motor Corp. have their strongholds in Mexico for exporting their products to the U.S. If the U.S. were to leave NAFTA and impose high tariffs, the Japanese companies could be forced to review their strongholds in Mexico.
During his election campaign, Trump made remarks encouraging Japan to arm itself with nuclear weapons in order to reduce the burden on U.S. forces in the country. But when he came to realize that the issue would touch on the very basis of the U.S. policy on Japan, he retracted the remarks rather easily. Because Trump does not need to make radical remarks any longer to attract voter attention after his election victory, Yoshimitsu Kobayashi, chairman of the Japan Association of Corporate Executives, or Keizai Doyukai, said, "It is possible for him to make a course correction in the process of actually deciding the structure of his administration. I hope he will do that."