A recent survey by Reuters has revealed that a greater number of Japanese companies believe a Kamala Harris presidency would be more beneficial for their businesses than another term for Donald Trump. The survey reflects widespread concerns among respondents regarding protectionist policies and the unpredictability of governmental decisions.
With the U.S. presidential election approaching in November, countries globally are closely monitoring the situation. Japan, a strong ally of the United States with a significant U.S. military presence, is particularly concerned about any resurgence of a trade war between the U.S. and China, as both countries are crucial trade partners.
According to the survey, 43 percent of Japanese firms expressed a preference for a Harris administration regarding their corporate strategies and business planning, while only 8 percent favored Trump. Additionally, 46 percent indicated that they would be fine with either candidate, with just 3 percent preferring neither.
A ceramics manufacturer indicated in the survey that another Trump administration could result in a trade war and economic tensions that would compel a reevaluation of business strategies. Relations between Japan and the Trump administration were sometimes strained, particularly concerning demands for increased military payments and trade conflicts.
In the view of Harris potentially retaining existing policies, an official from a chemicals company stated that this would provide better predictability for business operations moving forward.
When asked about potential changes necessitated by a Trump presidency, 34 percent of respondents mentioned that a review of their foreign exchange strategy would be required. Meanwhile, 28 percent indicated that supply chains would need adjustments, and 21 percent mentioned a reduction in operations in China.
Trump has proposed a 10 percent universal tariff on U.S. imports, which could disrupt global markets, primarily if it includes a steep tariff on Chinese goods.
The survey reached out to 506 Japanese companies between July 31 and August 9, with 243 organizations responding to the inquiry.
The survey also highlighted that irrespective of the election outcome, 13 percent of Japanese companies are contemplating decreasing their operations in China. In contrast, only 3 percent are considering expansion, while 47 percent intend to maintain their current level of operations in the country.
Among the companies looking to reduce their presence in China, 35 percent noted a lack of economic recovery prospects as a chief concern, while 29 percent cited fierce price competition, and another 29 percent pointed to economic security risks.
China’s economic growth has slowed unexpectedly, with its exports increasing at the slowest rate in three months in July, raising concerns about its manufacturing sector’s future.
Major Japanese companies, including Honda Motor and Nippon Steel, have recently announced plans to cut back in China. The survey found that 24 percent of participants deemed recent Japanese foreign exchange market interventions appropriate, compared to 9 percent who disagreed, while 64 percent viewed the actions as necessary.
The yen had been depreciating earlier this year despite intervention efforts, hitting a 38-year low against the dollar in early July. Authorities are believed to have intervened again in mid-July to stabilize the currency.
An electronics company official remarked that the extreme depreciation of the yen was an issue that needed to be addressed. Regarding the Bank of Japan’s interest rates, 51 percent of respondents stated such adjustments should only occur during excessive exchange rate fluctuations. In contrast, 22 percent opposed changes to monetary policy aimed at influencing the exchange market.
Looking ahead, expectations for the yen’s value show 32 percent foresee it trading between 145 to 150 yen to the dollar by year-end, 25 percent predict it will strengthen to 140 to 145 yen, and 22 percent believe it will be between 150 to 155 yen. The yen had faced volatility during the survey period, showing a brief recovery before continuing to weaken.