Poor Jerome Powell in Washington may be wearing the hard hat, but it’s Kazuo Ueda here in Tokyo who’s taking the real hits from Donald Trump.
Poor Jerome Powell in Washington may be wearing the hard hat, but it’s Kazuo Ueda here in Tokyo who’s taking the real hits from Donald Trump.
This week may be remembered as the moment when the Bank of Japan’s second effort since 1999 to normalize rates died. BOJ Governor Ueda said nothing of the sort on Thursday when he left the benchmark rate unchanged.
But Trump’s trade war has narrowed Ueda’s options to the point that BOJ watchers can barely see even a glimpse of a way forward.
Most Japan watchers are focusing on the wrong data point. For many, the issues is the 15% tariff that Prime Minister Shigeru Ishiba managed to score from Trump’s trade team.
Japan didn’t get off easy, exactly, but with Tokyo staring down the barrel of a possible 35% Trump tax and another 25% on autos, the outcome was fine by Tokyo. If Trump wants to quibble about the mechanics, financing methods and timeline of the $550 billion “signing bonus” fund he’s demanded, so be it. By the time anyone figures out what this entity is and how it works, the U.S. and Japan could both have new leaders.
The real issue is how the tariffs, and the chaos around them, have Japan barreling toward stagflation.
