Japan
The Japanese economy is in trouble. Not huge trouble. Its growth rate is a mere 0.5 percent. Inflation looks good at 2.2 percent but the country has an ageing population and low birth rate.
It is unsteady enough that a major setback could have big consequences for the world’s third largest economy. And Trump’s tariffs have created a setback for the country’s car industry. So much so that this week industry leaders took the unusual step of warning of tough times ahead.
Japan is heavily dependent on car exports. According to the International Trade Centre, 20 percent of Japanese exports are cars and car exports account for 28.3 percent of all Japanese exports to the US.
Trump’s tariffs, warned Japanese car manufacturers, will cost the country billions in lost profits and that the industry will be faced to tighten its belt for “the foreseeable future.”
Under the terms of a US-Japan trade agreement negotiated two months ago, across-the-board US tariffs on Japanese goods were reduced to 15 percent in return to a $550 billion Japanese investment in the US.
The problem is that Japan is already the biggest foreign direct investor in the US. At the end of 2024 it had $819.2 billion invested in the US. Much of it was in the car industry. In fact, 70 percent of the Japanese-brand cars sold in the US are manufactured in America.
Honda Motor announced last Friday that it expected the tariffs to cut its profits by approximately $2.5 billion. The previous day, Nissan Motors said it would have broken even this year if not for the tariffs. Instead, it projected a $1.8 billion loss.
Japan’s largest carmaker, Toyota Motors, said earlier this week that it expected tariffs to cost the company about $9.4 billion this year, an upward revision from its August forecast of $9.1 billion. The company said the levies were hitting not only its own exports but also its worldwide network of suppliers.
During his recent trip to Japan, Donald Trump, Mr. Trump said Toyota would sell American-made vehicles in Japan and would spend $10 billion constructing auto plants “throughout the United States.”
As usual, Trump’s hyperbolic comments required clarification. They came from Kenta Ton, Toyota’s chief financial officer who said that the company had made no “formal $10 billion commitment and selling American cars in Japan “was a possibility that Toyota would consider.”
Hungary
Trump faced a diplomatic dilemma as this blog went to press on Friday. Does his relations with a close foreign political ally outweigh the American national interest and, possibly, has chances of winning next year’s Nobel Peace Prize?
Normally any meeting between Donald Trump and Hungarian Prime Minister Viktor Orban is a glowing session of the mutual admiration society. Orban is seen by many in the administration and the wider MAGA movement as the European precursor for populist conservatism in America.
During Trump’s wilderness years, Orban continued to sing his praises and even visited him at his Mar-a-Lago Florida estate. The fact that Orban’s government was in bad odour with the Biden Administration has also helped him with Trump.
Many have pointed Orban’s crackdown on the media, immigration, courts and academia as a model for Trump’s own actions. And Deputy Secretary of State John Landau recently praised the Hungarian leader for his “unstinting defense of Western Christian values.”
But beside that is the recent sanctions that Trump imposed on Russia’s two biggest oil companies as a sign of the frustration that Trump feels at Putin’s refusal to compromise his positions on Ukraine.






