Analysis of Japan-US trade agreement
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Japan Times
an hour ago
- Japan Times
Nintendo keeps Switch 2 forecast unchanged despite hot start
Nintendo sold more than 6 million units of its Switch 2 console over its first seven weeks on sale, but kept its full-year forecast unchanged. The Kyoto-based company said on Friday that it still expects to sell 15 million units of its next-generation hardware by March, maintaining what's widely seen as a conservative view. The company said that new U.S. tariffs did not have a significant impact on its forecast. The record-setting pace of early sales of the Switch 2 more than doubled Nintendo's revenue in the June quarter. Operating profit in the period was ¥56.9 billion ($378 million), beating the average of analyst estimates. Nintendo sold 8.67 million copies of games for the Switch 2, with marquee launch title Mario Kart World drawing more than 5 million sales through the end of June. Released on June 5, the $450 Switch 2 got off to a sizzling start in key markets. It set new highs for global sales and reversed a decline in spending on video game hardware in the United States. Nintendo is now ramping up production, saying that demand for its new console exceeds supply in many countries. New tariffs introduced by the U.S. government may hamper the profitability of Nintendo's hardware lineup over the coming months, even with the company downplaying their impact on outlook. The Japanese entertainment giant ships most of its U.S.-bound machines from Vietnam and those will be subject to a 20% levy under the tariff regime of U.S. President Donald Trump's administration. Nintendo President Shuntaro Furukawa has said the company may have to raise prices, depending on the situation. "We expect the overall hardware segment to fall into operating loss' once the 20% tariff kicks in, UBS Securities analyst Yijia Zhai wrote in a report. "From the next fiscal year onward, there is a possibility that the price of the Switch 2 may be raised.' Sustaining the strong early momentum into this year's holiday shopping season won't be easy, especially with the Switch 2 being the most expensive piece of hardware Nintendo has ever sold, according to earlier comments from Furukawa. The company will strengthen its lineup of Switch 2 games next quarter with Pokémon Legends: Z-A, which will be available on Oct. 16.
Japan Times
an hour ago
- Japan Times
Japan food exports expand 15.5% in January to June
Japan's exports of agricultural, forestry and fishery products and other food items grew 15.5% from a year earlier to ¥809.7 billion ($5.48 billion) between January and June, the agriculture ministry said Monday. Exports to the United States, which announced "reciprocal" tariffs in April, hit a record first-half high of ¥141.0 billion, up 22.0%. The surge was driven by robust demand for scallops, green tea and yellowtail. The U.S. was the largest destination for such exports from Japan, accounting for 18.6% of the total exports. According to a survey by the ministry, some businesses still refrained from exporting due to concerns over uncertainty regarding U.S. President Donald Trump's tariffs. Exports to Taiwan and South Korea also hit record highs. The ministry attributed this to increased recognition of Japanese cuisine thanks to a rise in visitors to Japan, as well as an increase in Japanese restaurants. Meanwhile, exports were the highest on record for 19 items including beef, green tea and yellowtail. Scallop exports saw the sharpest increase, jumping ¥10.9 billion to around ¥35.0 billion. Exports of the shellfish to the U.S., Vietnam and Thailand grew. Green tea exports followed with ¥26.3 billion, up ¥10.4 billion. Shipments of matcha green tea powder, used for lattes and desserts, to the U.S., European and Southeast Asian markets were higher. The ministry has set an export target of ¥2 trillion for 2025. To achieve this, exports must increase over 47% in the July-December second half. The ministry plans to accelerate efforts to fully resume exports of fishery products to China.
Japan Times
an hour ago
- Japan Times
The EU's economic surrender only deepens its dependence on the U.S.
When U.S. President Donald Trump and European Commission President Ursula von der Leyen shook hands at Trump's Scottish golf resort late last month, they weren't just announcing a new trade deal — they were formalizing Europe's economic and ideological surrender. By agreeing to 15% tariffs on most exports to the United States, the European Union has capitulated to Trump's zero-sum worldview. In doing so, it has abandoned the principles of multilateralism that have long guided global trade. The economic consequences are immediate and severe. European exporters now face tariffs nearly 10 times higher than the previous trade-weighted average of 1.6%. Volkswagen alone has reported a €1.3 billion ($1.5 billion) hit due to higher U.S. tariffs. But the tariff rate itself is just part of the problem. The real damage lies in what the EU agreed to pay for the 'privilege' of maintaining access to the U.S. market: a commitment to purchase $750 billion worth of American energy over three years and to invest another $600 billion in the U.S. economy. These staggering sums will inevitably divert resources from European development and innovation while legitimizing bilateral coercion over the multilateral, rules-based World Trade Organization system. As critics have rightly pointed out, this massive outflow comes directly at the expense of domestic investment. What makes the EU's surrender especially troubling is how unnecessary it was. As America's largest economic partner, with nearly $1 trillion in annual trade, the EU has considerable leverage. While the U.S. runs a $235.6 billion goods deficit with the EU, the bloc's €148 billion services deficit with the U.S. offered clear avenues for retaliation, from digital taxes to restrictions on American tech giants. Weeks earlier, anticipating a stalemate, European policymakers had prepared counter tariffs targeting €93 billion worth of American goods. But the EU had far more potent weapons at its disposal. Its Anti-Coercion Instrument, for example, could have barred U.S. companies from government contracts, revoked intellectual-property rights and imposed broader trade restrictions. Yet national leaders, fearing Trump's retaliation and under pressure from domestic industries eager to maintain access to the U.S. market, refused to authorize von der Leyen to use any of these tools, forcing her to negotiate from a position of weakness. The contrast with other U.S. trading partners could not be starker. When the United Kingdom secured a 10% tariff rate from Trump in May, European leaders expressed concern about accepting similar terms. Now, they hail 15% tariffs on EU exports as a diplomatic breakthrough. The uncomfortable truth is that Britain, acting alone, negotiated better terms than the EU as a whole. This failure exposes the fundamental weakness of European governance. Lacking a true EU-wide governance system, the bloc remains incapable of translating competing national agendas into a unified position. With von der Leyen hamstrung by member states prioritizing narrow domestic interests over European cohesion, the result was a deal that pleases no one but Trump and locks Europe into a state of structured dependency. The EU's failure to push back against Trump is especially troubling given its stated goal of achieving strategic autonomy. Some may argue that the deal — technically not a formal trade agreement but rather a set of statements outlining an ongoing negotiation process — buys time. By appeasing Trump, the argument goes, the Commission has maintained transatlantic ties while creating space for future carve-outs. But if this were truly a time-buying strategy, we would expect the EU to take concrete steps to advance strategic autonomy: boosting defense spending, accelerating supply-chain diversification and investing in retaliatory capabilities. Instead, after years of pledging to reduce reliance on foreign powers, EU leaders chose to replace Russian energy imports with American supplies and commit to massive purchases of U.S. military equipment. Europe's subordination both reflects and reinforces the continent's dependence on U.S. power. For decades, European countries have failed to meet NATO's defense-spending targets, content to shelter under the U.S. nuclear umbrella. Now, the same deference is playing out on the economic front, as the EU proves unable to marshal its collective weight in the face of Trump's pressure tactics. This military and economic dependency has created a structural imbalance that extends across defense, trade and energy, leaving Europe in a state of permanent vassalization. Trump's ability to extract sweeping economic concessions and defense-spending commitments shows how effectively the U.S. can weaponize Europe's security anxieties to pursue broader geopolitical objectives. The $600 billion investment pledge, much of it earmarked for military-equipment purchases, forces Europe to subsidize American defense contractors while undermining its own industrial base. By giving in to Trump's demands, the EU missed a rare opportunity to demonstrate that large markets cannot be bullied. Instead of setting a powerful precedent for other regions confronting U.S. economic pressure, it has validated Trump's transactional approach, emboldening not only future American administrations but also other global powers eager to turn trade into an instrument of geopolitical coercion. While the immediate crisis may have passed, the long-term damage to EU credibility and autonomy will be long-lasting. The widespread perception that Europe surrenders without resistance will undoubtedly invite further challenges to European interests. Rather than attempting to shift the blame to von der Leyen, EU member states must ask themselves whether avoiding a trade war was worth abandoning Europe's foundational commitment to multilateralism and forfeiting any credible path toward strategic autonomy. Until European leaders find the courage to break the cycle of dependency by empowering EU institutions to act decisively against external coercion, these humiliating capitulations will only multiply, reducing the continent to a prosperous yet powerless appendage of the American empire. Alberto Alemanno, professor of European Union law at HEC Paris and visiting professor at the College of Europe in Bruges and Natolin, is founder of The Good Lobby and the author of "Lobbying for Change: Find Your Voice to Create a Better Society" (Icon Books, 2017). © Project Syndicate, 2025
