
Japan's smaller firms say they are ready to adapt to Trump tariffs
As part of a campaign against friend and foe, the U.S. president has threatened 25% tariffs on imports of Japanese goods from Aug. 1, having already imposed tough levies on its vehicles, steel and aluminum.
However, Miyazaki said that he was confident.
"We are providing very specialized products for specialized industries, where it is difficult to change suppliers or supplying countries just because of boosted tariffs," he said on a tour of the 92-year-old firm.
"I'm not worried too much, because if American companies can't produce parts on their own, they have no choice but to import those parts regardless of tariffs," the descendant of the firm's founder said.
With 100 employees, Mitsuwa Electric is not a household name.
But like millions of other SMEs that account for 99.7% of Japan's companies, it is world-class in its specialist niche.
It began making light bulb filaments and now produces coils, rods, needles, plates, pipes and wires for a range of goods including car lights, photocopiers and X-ray machines.
In 2022, it won a Guinness World Record for the smallest commercially available metal coil, with a diameter around half that of a human hair.
Mitsuwa's customers are across Asia, Europe and North America and include Japanese engineering giant Toshiba and Toyota-affiliated parts maker Koito Manufacturing.
Miyazaki said the impact of U.S. tariffs on the company's business is limited so far, with one auto sector customer asking it to lower prices.
"All we can do is to adapt to any changes in the business environment," Miyazaki said.
Prime Minister Shigeru Ishiba has sent his tariffs envoy Ryosei Akazawa to Washington seven times since April to try to win relief from the tariffs.
U.S. Treasury Secretary Scott Bessent was due to meet Ishiba and Akazawa on Friday in Tokyo.
But the prime minister's apparently maximalist strategy of insisting all tariffs are cut to zero have been criticized in some parts, especially as Aug. 1 approaches.
U.S.-bound exports of Japanese vehicles — a sector tied to 8% of Japanese jobs — tumbled around 25% in May and June.
The lack of a deal isn't helping Ishiba's popularity ahead of an Upper House election on Sunday that may end Ishiba's premiership after less than a year.
What bothers Japanese firms is Trump's unpredictability and the complexity of the tariffs, according to government-backed SME support organization Japan External Trade Organization.
Since February, the group has received more than 2,000 inquiries from members about U.S. tariffs, with a flood of requests since June asking for "the latest information" as the deadline approaches.
Mitsuwa Electric boss Miyazaki admits worrying about Trump's threat of pharmaceuticals tariffs of 200%, or if medical equipment is targeted.
Together with its broad product range, the diversification of its customer base has shielded it so far, he said.
This is also vital for other firms to survive, said Zenkai Inoue, an SME expert and professor at the Kyushu Institute of Information Sciences.
"I'm proposing a 'tricycle strategy,' which means you have to have (at least) three customers in different regions," he said.
"For SMEs, securing financial stability by asking banks for their funding is important to survive for the time being, then the next step would be expanding their sales channels to other markets," he said.
Inoue added that some Japanese firms had been slow to prepare for Trump's tariffs, even after he said he would during his 2024 election campaign.
"There was a time when Japanese companies, having heavily relied on the Chinese market, (were) hurt badly by a sudden change in China's policy. But some of them have not learnt a lesson enough from that experience," he said.
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The Mainichi
3 hours ago
- The Mainichi
US-Japan: Reimagining an alliance for a fractured world
The following is a contribution to the Mainichi Shimbun from Michael Schiffer, who served as assistant administrator of the Bureau for Asia at the United States Agency for International Development (USAID), which was dismantled by the Donald Trump administration. In his contribution, Schiffer discusses the future of the Japan-U.S. alliance. -- In the first six months of the second Trump administration, the U.S.-Japan alliance has been rocked by renewed uncertainty. Although the July 22 tariff agreement has relieved some of the immediate pressure, the negotiations were contentious and drawn-out, with the White House's threats to impose fresh tariffs on Japanese automobiles and agriculture, coupled with demands that Tokyo increase its host-nation support for U.S. forces and step up its security commitments in the region -- demands that may have contributed to the "postponement" of a planned 2+2 meeting earlier this month -- reviving painful memories of the trade wars and alliance strains of the 1980s. Trump's public questioning of whether the United States will live up to its alliance commitments, alongside his erratic posture on Ukraine and unilateral cuts to foreign assistance programs -- including those supporting Indo-Pacific infrastructure and governance -- have further shaken confidence in the reliability of American leadership. At a time when the foundational pillars of the post-war world are cracking under the combined weight of technological upheaval, environmental crisis, demographic transformation, and a new era of great-power rivalry, these moves have undermined the sense of strategic stability that has long defined an alliance that has served as the cornerstone for peace, security and prosperity for Tokyo and Washington alike. In the face of these structural changes, alliance managers must move beyond the conceptual mainstream, and seek to imagine a new world rather than continue to act as custodians of a fading order, attempting to solve 21st-century problems with 20th-century blueprints and defending the sanctity of an alliance built for a world that no longer exists. And yet, Japan remains one of America's most capable, trusted, and forward-looking allies. With its advanced economy, technological prowess, and increasingly assertive defense policy, Japan is uniquely positioned to work with the United States on the basis of shared interests and shared values to navigate the strategic challenges of a more contested Indo-Pacific -- and the generational challenge of a more assertive and aggressive China, with its own vision for what the regional and global order should look like. Neither the U.S. or Japan are likely to be successful in this undertaking alone, and even less so if Washington and Tokyo are working at cross-purposes. Doing so will also require more than a reaffirmation of old commitments. The rapidly changing global geostrategic and geoeconomic landscapes demand a fundamental reimagining of the alliance -- across economic, technological, diplomatic, and military domains. The rise of a more assertive China -- militarizing the South and East China Seas, threatening Taiwan, weaponizing economic coercion, and seeking to shape global norms to its advantage -- has made clear that alliances anchored in Cold War-era assumptions about roles, missions and capabilities are no longer sufficient. Tokyo recognizes this: Japan has undertaken a historic defense build-up, doubled its defense budget, and committed to acquiring counterstrike capabilities, signaling a Japan that is ready to be not just a junior partner, but a co-equal shaper of regional stability. The United States must meet this moment with strategic imagination, not just a narrowly construed "America First" transnationalism. That means moving beyond instrumental debates over cost-sharing to deepen integration across defense planning, technological innovation, and economic resilience. The U.S.-Japan alliance faces a precarious security landscape, one demanding immediate and decisive action. From China's assertive military expansion and "gray zone" tactics in the East and South China Seas, particularly around the Senkaku Islands and Taiwan, to North Korea's relentless pursuit of nuclear and ballistic missile capabilities, the Indo-Pacific is increasingly volatile, all part and parcel of an international system that is rapidly evolving from X to Y. Given the scope and scale of these challenges, we cannot afford complacency. It is imperative that Washington and Tokyo accelerate our joint development of next-generation defense technologies -- AI-enabled command systems, autonomous platforms, cyber defense -- and fast-tracking the co-development and deployment of advanced technologies, strengthening integrated air and missile defense systems, and ensuring seamless interoperability of our forces across all domains. This will help the alliance to deter aggression and operate effectively in an era defined by multi-domain conflict. The time to act is now, not only to safeguard our shared security interests but to uphold regional stability and to set the rules for the evolving international order against growing authoritarian challenges. Economically, the alliance must focus on shaping the rules of the road for the 21st century. With the Trans-Pacific Partnership long abandoned, the U.S. and Japan should spearhead digital trade agreements, investment screening regimes, and supply chain partnerships that insulate both economies from coercive pressures. Initiatives like the U.S.-Japan Economic Policy Consultative Committee (EPCC) should be scaled up into a formal economic dialogue akin to the 2+2 defense framework, driving coordination on geoeconomic strategy. While headlines may be dominated by tariffs and calls for economic rebalancing, it's crucial to recognize these discussions as echoes of a bygone era. While there are valid arguments for rebalancing, obsessing over trade deficits and protectionist measures risks diverting our focus from the true challenges and opportunities of the 21st century. The global economic landscape has fundamentally shifted, and our attention must pivot from the battles of the past to the imperative of co-leading the future. This means looking beyond traditional trade in goods to foster deeper collaboration and shared investments in areas like the governance of emerging technologies, resilient supply chains, and the green economy, ensuring our alliance is not just economically balanced but future-proofed. Finally, Japan and the United States should jointly invest in regional capacity-building -- from infrastructure finance to maritime domain awareness to climate resilience. This means reconsidering cuts to foreign assistance and treating development as a strategic instrument. Japan's extensive development networks and America's innovation ecosystem can be combined to offer a robust alternative to China's Belt and Road. To meet the test of this moment, the U.S.-Japan alliance must become more than a security arrangement. It must be a platform for shared strategy, innovation, and governance in the Indo-Pacific. The future of the U.S.-Japan alliance hinges on our willingness to confront the present with clear eyes and bold action. This isn't a moment for nostalgia; it's a demand for strategic reimagining. We must move beyond outdated notions of stability and influence to rebuild an alliance fit for a fragmented and fast-moving world. This means prioritizing investment beyond military modernization to include the governance of emerging technologies. It requires us to fully integrate climate adaptation and economic competitiveness as core pillars of national security. And critically, it compels us to evolve the institutions and coalitions -- both formal and informal -- that are essential for managing geopolitical volatility and for competing effectively with the PRC. The past six months have been challenging for Tokyo and Washington. But we have an opportunity to seize the moment to forge an alliance that is not just resilient, but truly transformative for the 21st century. Profile: Michael Schiffer has served as U.S. Deputy Assistant Secretary of Defense for East Asia, senior advisor and counselor on the Democratic Staff of the Senate Foreign Relations Committee, and assistant administrator of the USAID Bureau for Asia. His areas of expertise include U.S. foreign and defense policy, and security in the Indo-Pacific region.


Kyodo News
3 hours ago
- Kyodo News
FOCUS: Nikkei likely to stay above 40,000 despite political uncertainty
TOKYO - Boosted by a Japan-U.S. trade deal, the Nikkei stock index is expected to stay afloat above the 40,000 threshold at least for a while, despite political uncertainty created by the major setback suffered by Japan's ruling parties in a recent national election. The benchmark may soon break its record high by surpassing 42,224.02 registered a year ago, but the market could face a downside risk if long-term interest rates surge further due to expectations of expansionary fiscal measures like a consumption tax cut. "With uncertainty over tariff negotiations dispelled, it makes it easier for companies to foresee future earnings, helping to support the stock market," said Maki Sawada, a strategist at the Investment Content Department of Nomura Securities Co. The Nikkei added more than 2,000 points over the two days through Thursday after the agreement that U.S. tariffs on imported Japanese cars and other goods will be lowered sharply to 15 percent, although the yield on the key 10-year government bond spiked to 1.600 percent, its highest level since 2008. "As long as higher interest rates are accompanied by improving business performance, stocks will rise as seen in the past," Sawada said, expecting the index to be supported around the 40,000 line. The market is likely to be buoyed by hopes for upward revisions in earnings after some major companies like Toyota Motor Co. projected a hefty 35 percent drop in net profit for this fiscal year by factoring in an additional 25 percent tariff imposed by Washington from April. Trade data show that Japan's shipments to the United States, the largest export destination for Japanese automakers, dropped 11.4 percent in value terms in June from a year earlier for the third consecutive monthly decline, contributing to a 30.8 percent plunge in its trade surplus with the country. "Stocks may be further lifted by positive incentives like more U.S. trade deals with the European Union and China, as well as economic data and earnings," possibly sending the Nikkei to the 44,000 level at one point, said Masahiro Yamaguchi, head of investment research at SMBC Trust Bank. While many analysts believe the current level of long-term interest rates at around 1.6 percent is unlikely to be an obstacle for stocks to chase higher ground, a spike toward 2 percent may stir concerns about increased borrowing costs and dent market sentiment. Situations surrounding the bond market suggest the likelihood of the yield climbing further, as the Japan-U.S. trade deal helped ease concern about the prospects of the domestic economy and will make it easier for the Bank of Japan to further raise interest rates. The tariff deal is a "big step forward," as it reduces economic uncertainty facing Japanese companies under U.S. President Donald Trump's trade policy, BOJ Deputy Governor Shinichi Uchida said Wednesday. His remark fueled speculation that the central bank will increase the policy rate again after raising it three times since March last year to around 0.50 percent, as it shifts from a decade of unorthodox monetary easing. "Given that the tariff negotiations ended up with a desirable agreement despite expectations of tough going, the recession risk in the second half of this year has alleviated considerably," said Daiju Aoki, chief Japan economist at UBS SuMi TRUST Wealth Management Co. "Japan's interest rates are likely to remain elevated with the probability of a rate hike by the end of year increasing significantly," Aoki said, adding that investors will adopt a cautious stance about buying bonds, whose prices move inversely to yields. Reflecting expectations for weakening demand, the auction for 40-year government bonds held Wednesday was sluggish, with the bid-to-cover ratio standing at 2.13 percent, its lowest level since 2011. Higher yields also followed on from the results of Sunday's House of Councillors election, which raised the possibility that expansionary fiscal measures may be adopted in the future, leading to further deterioration in Japan's fiscal health. The Liberal Democratic Party and its coalition partner Komeito suffered a major setback in the election, losing their majority in the upper house, with opposition forces urging that the consumption tax be cut, suspended, or even abolished to ease the pain of inflation. The ruling coalition, meanwhile, pledged to deliver cash handouts, which are likely to require fewer financial resources. "Currently the key long-term yield remains at around 1.6 percent, as there have not been specific moves leading to stimulus measures such as reducing the consumption tax," said Yutaka Miura, senior technical analyst at Mizuho Securities Co. "But if such moves come into sight, such as opposition parties starting to request such measures, the yield could climb further," he said, adding that it could affect negatively to the stock market if it rises to between 1.7 and 1.8 percent.


Japan Today
5 hours ago
- Japan Today
Nikkei likely to stay above 40,000 despite political uncertainty
A financial data monitor in Tokyo shows the Nikkei Stock Average climbing above 42,000 on July 24, 2025. (Kyodo) ==Kyodo By Risako Nakanishi Boosted by a Japan-U.S. trade deal, the Nikkei stock index is expected to stay afloat above the 40,000 threshold at least for a while, despite political uncertainty created by the major setback suffered by Japan's ruling parties in a recent national election. The benchmark may soon break its record high by surpassing 42,224.02 registered a year ago, but the market could face a downside risk if long-term interest rates surge further due to expectations of expansionary fiscal measures like a consumption tax cut. "With uncertainty over tariff negotiations dispelled, it makes it easier for companies to foresee future earnings, helping to support the stock market," said Maki Sawada, a strategist at the Investment Content Department of Nomura Securities Co. The Nikkei added more than 2,000 points over the two days through Thursday after the agreement that U.S. tariffs on imported Japanese cars and other goods will be lowered sharply to 15 percent, although the yield on the key 10-year government bond spiked to 1.600 percent, its highest level since 2008. "As long as higher interest rates are accompanied by improving business performance, stocks will rise as seen in the past," Sawada said, expecting the index to be supported around the 40,000 line. The market is likely to be buoyed by hopes for upward revisions in earnings after some major companies like Toyota Motor Co. projected a hefty 35 percent drop in net profit for this fiscal year by factoring in an additional 25 percent tariff imposed by Washington from April. Trade data show that Japan's shipments to the United States, the largest export destination for Japanese automakers, dropped 11.4 percent in value terms in June from a year earlier for the third consecutive monthly decline, contributing to a 30.8 percent plunge in its trade surplus with the country. "Stocks may be further lifted by positive incentives like more U.S. trade deals with the European Union and China, as well as economic data and earnings," possibly sending the Nikkei to the 44,000 level at one point, said Masahiro Yamaguchi, head of investment research at SMBC Trust Bank. While many analysts believe the current level of long-term interest rates at around 1.6 percent is unlikely to be an obstacle for stocks to chase higher ground, a spike toward 2 percent may stir concerns about increased borrowing costs and dent market sentiment. Situations surrounding the bond market suggest the likelihood of the yield climbing further, as the Japan-U.S. trade deal helped ease concern about the prospects of the domestic economy and will make it easier for the Bank of Japan to further raise interest rates. The tariff deal is a "big step forward," as it reduces economic uncertainty facing Japanese companies under U.S. President Donald Trump's trade policy, BOJ Deputy Governor Shinichi Uchida said Wednesday. His remark fueled speculation that the central bank will increase the policy rate again after raising it three times since March last year to around 0.50 percent, as it shifts from a decade of unorthodox monetary easing. "Given that the tariff negotiations ended up with a desirable agreement despite expectations of tough going, the recession risk in the second half of this year has alleviated considerably," said Daiju Aoki, chief Japan economist at UBS SuMi TRUST Wealth Management Co. "Japan's interest rates are likely to remain elevated with the probability of a rate hike by the end of year increasing significantly," Aoki said, adding that investors will adopt a cautious stance about buying bonds, whose prices move inversely to yields. Reflecting expectations for weakening demand, the auction for 40-year government bonds held Wednesday was sluggish, with the bid-to-cover ratio standing at 2.13 percent, its lowest level since 2011. Higher yields also followed on from the results of Sunday's House of Councillors election, which raised the possibility that expansionary fiscal measures may be adopted in the future, leading to further deterioration in Japan's fiscal health. The Liberal Democratic Party and its coalition partner Komeito suffered a major setback in the election, losing their majority in the upper house, with opposition forces urging that the consumption tax be cut, suspended, or even abolished to ease the pain of inflation. The ruling coalition, meanwhile, pledged to deliver cash handouts, which are likely to require fewer financial resources. "Currently the key long-term yield remains at around 1.6 percent, as there have not been specific moves leading to stimulus measures such as reducing the consumption tax," said Yutaka Miura, senior technical analyst at Mizuho Securities Co. "But if such moves come into sight, such as opposition parties starting to request such measures, the yield could climb further," he said, adding that it could affect negatively to the stock market if it rises to between 1.7 and 1.8 percent. © KYODO