More Japanese companies believe a Kamala Harris presidency in the United States would be better for their business than a second Donald Trump administration, a Reuters poll showed, reflecting respondents’ concerns about protectionism and political unpredictability.
The outcome of November’s US presidential election is being closely watched by countries around the world. But Japan is a close ally of Washington, with tens of thousands of American troops stationed in the Asian country.
Furthermore, Japanese businesses would feel the impact of a new US-China trade war, as both are among its top trading partners.
About 43% of Japanese companies said they preferred Kamala in view of their corporate strategies and business plans, while 8% chose Trump.
A total of 46% said either candidate would be good, with the remaining 3% saying they preferred neither.
“There is a possibility that trade war, economic friction and security threats could be provoked under another Trump administration, forcing us to change our business strategy,” a manager at a ceramics manufacturer wrote in the survey.
Japan’s relations with the Trump administration have at times been strained by its demands for more payments for military assistance and trade tensions.
With Kamala, “we can expect current policies to be maintained across the board. That would give us better visibility for the future,” said an official at a chemical company.
Asked what changes would likely be needed under a Trump administration, 34% said their foreign exchange strategy would need to be revised, while 28% said their supply chains would be realigned and 21% said they would scale back their operations in China.
Trump has floated the idea of a universal 10% tariff on US imports, which could disrupt international markets, and a tariff of at least 50% on Chinese goods.
Nikkei Research contacted 506 companies from July 31 to August 9 on behalf of Reuters for the survey, with 243 companies responding.
Slowdown in China
Regardless of who wins the US election, 13% of Japanese companies are considering reducing operations in China, while 3% are looking to expand their business, with 47% planning to maintain their current exposure, the survey showed.
Among those considering reducing operations in China, 35% said they saw no prospects for economic recovery, 29% cited strong price competition and another 29% pointed to economic security risks as reasons for reducing.
China’s economy grew much more slowly than expected in the second quarter and its exports increased at their slowest pace in three months in July, raising concerns about the outlook for its vast manufacturing sector.
Major Japanese companies that have announced cuts to their China operations in recent months include Honda Motor Co and Nippon Steel Co.
The survey also showed that 24% of respondents viewed recent rounds of foreign exchange intervention by Japanese authorities as appropriate, compared with 9% who thought the actions were inappropriate and 64% who believed they were inevitable.
The yen continued to slide earlier this year despite intervention in April and May, hitting a 38-year low of 161.96 per dollar on July 3. Japanese authorities are suspected of having intervened again in mid-July to put a floor under the currency.
“The yen’s extreme weakness had to be corrected. There was simply no way around it,” said an official at an electronics company.
Asked whether the Bank of Japan should raise interest rates to support the yen, 51% said such a move was permissible only when exchange rates fluctuated excessively, while 22% said they did not support a change in monetary policy aimed at affecting the currency market.
On expectations for the yen, 32% saw it trading in a range of 145 to 150 yen per dollar by year-end, while 25% predicted the Japanese currency would be firmer at 140 to 145 yen, while 22% saw it trading between 150 to 155 yen.
During the survey period, the yen was volatile and reached its strongest level since the start of the year before reversing course. Since then, it has continued to weaken.
Source: CNN Brasil
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