Japan’s manufacturers brace for US import tax
28% mull boosting output, procurement in America
Should such a tax be implemented, 28 percent of the manufacturers who expect profits to be affected would consider raising output and procurement within the US. Among automotive businesses, that figure climbs to 80 percent, the poll showed.
Critics of the border tax say it could be passed on to American consumers through higher prices, and the survey flagged potential hikes among some companies.
Seventeen percent of manufacturers would try to offset the impact on earnings through price increases, including 40 percent of electrical machinery firms, though just 10 percent of automotive companies would do so.
Meanwhile, 38 percent would deal with a tax through cost- cutting, the most popular choice. Overall, 72 percent of manufacturers would take some kind of steps to cushion the earnings blow.
Taro Saito, director of economic research at NLI Research Institute, said the percentage of companies anticipating earnings hit was smaller than he had expected. He questioned whether some were taking the tax plan seriously given that cost-cutting was the top choice.
“As the border tax plan becomes more of a reality, more businesses will shift to boost local production and procurement,” said Saito, who reviewed the survey results.
“It is such a big change in policy that companies will find it hard to come up with any countermeasures. It is simply impossible for companies to cope with a border tax rate of 20 percent,” he said.
Indeed, the survey showed that no Japanese company would be able to offset a 20 percent border tax. Just 4 percent would be able to cope with a tax rate of up to 10 percent and the remainder could offset up to just 5 percent.
“‘America First’ is not good,” wrote a manager at a distribution company.