Japan's economy could slow by 0.8% in 2025 due to US tariffs — UBS

UBS analysts believe that US import tariffs pose a serious threat to Japan's economy, potentially reducing its growth by 0.8 percentage points in 2025. The new American president has been aggressively raising import duties since taking office. Last week, he promised to tighten his measures further. As a result, Japan faced additional 24% tariffs on most of its goods delivered to the United States, excluding semiconductors, pharmaceuticals, and some auto products.

Trump's actions are also hindering interest rate hikes in the Asian country. If the current tariffs remain in place, the Bank of Japan will have to postpone these hikes until at least mid-2026, according to UBS.

However, the Asian country is open to negotiations. UBS suggests that the US and Japanese governments may reach an agreement in the third quarter, which could drop tariffs on Japan down to 10-15% by the end of 2025. Under such conditions, the Asian country will have more opportunities to implement the planned increase in interest rates, UBS experts think.