“In 2025, Japanese firms reported that uncertainty about United States tariffs was adversely affecting their investment decisions in the United States.”

Japan is the world's fourth-largest economy, the United States' fifth-largest trading partner in 2024, and the largest source of foreign direct investment (FDI).

In the U.S., fewer respondents saw a YoY increase in operating profit forecast due to cost increases and economic uncertainty caused by tariffs. As a result, the 2025 business sentiment has reached the lowest level since 2020. Some common reasons for decreased operating profit forecasts are rising procurement costs and decreasing demand in the U.S. market, which are attributed to the Trump tariffs.

As a result, the 2025 business sentiment has reached the lowest level since 2020. Some common reasons for decreased operating profit forecasts are rising procurement costs and decreasing demand in the U.S. market, which are attributed to the Trump tariffs. While many Japanese companies in the U.S. acknowledge that tariffs and relevant policies will increase the uncertainty of the U.S. economy, 48.3% of them expect to expand their business in the next one to two years, maintaining a similar level to 2024 (48.6%).

Nearly 40% of companies expect negative impacts from U.S. tariff policy both short term and long term. Respondents expressed concerns about rising import costs and declining customer performance.

The impact of U.S. tariff measures extends beyond Japan's direct exports, broadly affecting the global supply chains of Japanese companies. A global economic downturn is expected to lead to reduced demand, increased costs due to revisions in sales and procurement strategies, and a decline in investment sentiment.

FY2025 Features: Despite trade disruptions triggered by additional U.S. tariffs, the performance of Japanese companies.

In July 2025, the United States and Japan reached a major trade agreement that includes Japan’s pledge to invest $550 billion in U.S. industries in return for lower tariffs on Japanese imports. However, it remains far from certain whether Japan will fully invest the $550 billion, as the country may instead choose to opt out and accept a higher tariff.

Keidanren welcomes the agreement reached with the United States to reduce the reciprocal tariff rate on Japan from 25% to 15%, and to lower the additional 25% tariff on automobiles and auto parts to a total of 15%, inclusive of the existing MFN rate. This outcome reflects the results of vigorous and constructive negotiation rounds. Keidanren has consistently emphasized that a 'prompt but measured' approach should be adopted in the negotiations.

Some companies suffer from U.S. tariffs, while others aim to expand U.S. investment long term. Many companies suffered direct or indirect negative impacts on profits due to the strengthening of U.S. tariffs. Conversely, some companies, particularly those with bases in the U.S., viewed the tariffs as an opportunity and sought to expand their businesses.

Japanese business leaders have voiced growing concerns that uncertainty surrounding U.S. tariff policy will heighten investment risks, after U.S. President Donald Trump announced an additional 15 percent tariff on goods from all countries and regions. Yoshinobu Tsutsui, chairman of the Japan Business Federation, said on Tuesday that uncertainty over U.S. tariff policy has made the business environment difficult to predict, increasing risks for corporate investment decisions.

Many companies are more worried about the indirect rather than direct impact from the Trump tariffs, namely that uncertainty about the future will lead to weaker levels of consumption and investment. However, I suspect few companies have factored impacts of that nature into their reported earnings outlooks due to the difficulty involved in quantifying them.

83% of Japanese professionals expect negative outcomes from US tariffs. Among the businesses that include operations in the U.S., 83.3% expect negative consequences: 37.5% of them say 'significant' and 45.8% say 'moderate-negative impact.' When identifying the most significant risks to the global economy in the next 12 months, Japanese businesses cited geopolitical conflicts and U.S. political uncertainty as their key concerns.

An overwhelming number of Japanese companies cite the Trump administration's policies and economic trends in the United States among their top five concerns. Despite growing uncertainty surrounding the impact of Trumponomics, Japanese investors don’t necessarily want to retreat from the U.S. The percentage of companies planning to increase their sales in this market remained nearly unchanged, at 46.9%, compared to the previous year’s survey.

Suzuki showed a skeptic viewpoint of the future trajectory of this plan due to their unpredictable and unfair protocols. Pivette noted that regardless of the judgment by the U.S. Supreme Court, the product-specific tariffs, including automobiles and aluminum, would still continue to apply. Thus, business entities still need to prepare to alleviate the burden of these tariffs.

Keidanren has published a brochure which highlights Japanese companies' contribution to the US economy through investment and employment. We will continue to make efforts to strengthen ties between Japan and the US, utilizing this brochure to illustrate our efforts currently underway.

Since the administration took office in January 2025, uncertainty surrounding U.S. additional tariff measures has increased significantly, and the IMF downgraded its global economic growth forecast in April 2025.

Keidanren welcomes the agreement reached with the United States to reduce the reciprocal tariff rate on Japan from 25% to 15%, and to lower the additional 25% tariff on automobiles and auto parts to a total of 15%, inclusive of the existing MFN rate.

Keidanren has published a brochure which highlights Japanese companies’ contribution to the US economy through investment and employment. We will continue to make efforts to strengthen ties between Japan and the US, utilizing this brochure to illustrate our efforts currently underway.

JETRO's annual surveys consistently track Japanese firms' overseas operations, and in 2025 editions, tariff uncertainty under the Trump administration was a major factor cited for lowered business sentiment and cautious investment plans in the US, though some sectors like semiconductors planned expansion despite this.