Expect significant new tariffs on Chinese imports and moderate levies on goods from other nations , as President-elect Donald Trump rolls out his protectionist agenda. However, with his preference for chaotic policymaking and sudden shifts , there’s uncertainty on how soon these import taxes will actually hit. Dubbed “ Tariff Man ,” Trump aims to use tariffs both strategically and tactically . He’s mentioned taxing all Chinese goods up to 60% and potentially setting 10%-20% tariffs on imports globally , but details on these plans remain vague . Key players within Trump’s team are divided: Robert Lighthizer , a staunch tariff advocate, sees permanent duties as crucial to balance US trade , while others, like billionaires John Paulson and Scott Bessent , view tariffs as temporary leverage. Trump’s previous administration had mixed feelings, especially on national security-related trade limits , which he sometimes dismissed, favoring an “open for business” approach. High-profile busin
Inflation in Tokyo accelerated in August, strengthening the argument for the Bank of Japan (BOJ) to continue its gradual interest rate hikes while balancing support for the economy. Consumer prices, excluding fresh food, rose by 2.4% compared to 2.2% in July, exceeding the consensus estimate of 2.2%, according to the Ministry of Internal Affairs. These Tokyo figures are considered leading indicators for national inflation data expected in September.
Key Takeaways:
Potential for Further Rate Hikes: Following the BOJ’s rate hike on July 31, Governor Kazuo Ueda signaled openness to additional hikes if inflation trends align with the bank's projections. However, Ueda has also expressed caution, indicating that the BOJ will carefully assess the impact of financial market instability before making further policy moves.
Mixed Economic Indicators: Additional data showed a mixed economic picture, with Japan's jobless rate increasing to 2.7% and factory output rising by 2.8% in July, though it missed the consensus forecast of 3.5%. Retail sales growth slowed to 2.6% year-on-year, barely outpacing inflation. These factors suggest a slow recovery of the real economy, making an immediate rate hike unlikely.
Inflation Drivers and Economic Outlook: Rising energy prices have contributed significantly to inflation, with electricity prices surging by 24.2% in August. While there is hope that higher wages driven by tight labor market conditions could make households more resilient, economists believe a strong economic recovery justifying an early rate hike is unlikely. Most expect the BOJ to hold steady on rates at its next meeting on September 20, with the possibility of a rate hike delayed until early next year.
Overall, the latest data supports a cautious approach by the BOJ, balancing the need to address inflation while ensuring economic stability. The upcoming leadership race within the ruling Liberal Democratic Party (LDP) and possible policy shifts could also influence the economic landscape in the coming months.
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