08/16 – International News Story

In a recent Reuters survey, Japanese businesses revealed they are more inclined to favor a potential Kamala Harris presidency over a second term for Donald Trump. Respondents’ opinions reflected significant concerns about protectionism and policy unpredictability. 

Japan, a close ally of the United States and deeply affected by its economic policies, is watching the outcome of the upcoming U.S. presidential election closely, especially in light of the ongoing U.S.-China trade tensions.

The survey, carried out by Nikkei Research between July 31 and August 9, reached 506 Japanese companies, with 243 firms responding. Among them, 43% expressed a preference for Harris, citing a desire for stability and continuity in U.S. policies. In contrast, only 8% preferred Trump, while 46% stated that either candidate would be acceptable, and 3% favored neither. [Reuters] 

A ceramics manufacturer highlighted the potential challenges of another Trump administration, noting that “trade war, economic friction, and security threats” could force a reevaluation of their business strategy. This sentiment was echoed by a chemicals firm official who appreciated the predictability that a Harris administration might offer, suggesting that it would provide “better visibility into the future.”

Japanese companies also expressed concerns about potential changes under a Trump administration, with 34% indicating a need to review their foreign exchange strategies, 28% considering supply chain realignments, and 21% contemplating a reduction in their China operations. [Reuters] 

The survey also shed light on the broader economic relationship between Japan and China, revealing that 13% of Japanese companies are considering reducing their operations in China, regardless of the U.S. election outcome. Economic challenges in China, including a slower-than-expected GDP growth in the second quarter and a decline in export growth, are driving these decisions. Companies like Honda Motor and Nippon Steel have already announced cutbacks in their China operations. 

The recent survey also touched on Japan’s foreign exchange market, where 24% of respondents supported recent interventions by Japanese authorities to stabilize the yen, which had reached a 38-year low against the dollar earlier this year. While opinions were mixed on whether the Bank of Japan should raise interest rates to support the yen, 51% of respondents agreed that such a move should only occur in cases of extreme exchange rate fluctuations.

As the yen continues to show volatility, Japanese companies are bracing for a range of possible outcomes by the end of the year. The survey results indicate that 32% of firms expect the yen to trade between 145 to 150 yen per dollar, while 25% predict a firmer range of 140 to 145 yen, and 22% foresee it weakening further to between 150 to 155 yen per dollar.  [Reuters] 

Overall, it seems Japanese businesses are looking to navigate a complex economic landscape influenced by both U.S. and Chinese policies, with many looking for stability and predictability in the face of potential global disruptions. Man or woman that is in the White House come 2025 will serve to influence what this uncertainty holds for Japan and the rest of global markets.