Japanese Manufacturing Sentiment Dips Amid US Tariff Concerns

Japanese manufacturing sentiment has worsened for the first time in a year due to US tariffs and population decline. Tariffs on auto imports stress key sectors, prompting Japan to negotiate exclusions. The economy faces additional pressures from global demand slowdowns and rising material costs.

Sentiment among large Japanese manufacturers has declined for the first time in a year, as concerns over US President Donald Trump's tariffs mount, according to a recent survey by Japan's central bank.

The Bank of Japan's tankan survey recorded a dip in the manufacturers' confidence index, moving from plus 14 in December to plus 12, marking the first decline in four quarters. Critical sectors like automotive and electronics, crucial for Japan's economy, face uncertainty due to tariffs on US-bound exports.

While a shrinking population hinders growth, rising wages and a tourism surge have offered some relief. Prime Minister Shigeru Ishiba signaled intentions to negotiate with the US to exclude Japan from auto tariffs. Meanwhile, Japan's export-dependent economy grapples with external demand slowdowns and climbing material costs, exacerbated by a weaker yen.

(With inputs from agencies.)