Planned new US tariffs could have a huge impact on world trade, Bank of Japan Governor Kazuo Ueda said on Wednesday, warning of a possible hit to global growth hours before President Donald Trump is set to unveil reciprocal tariffs.
The expected move will come on top of US tariffs on imports of aluminum and steel imports, as well as higher duties on all goods from China. Trump has also repeatedly threatened to impose other tariffs, only to cancel or postpone them.
Ueda said he would like to share views with counterparts in the G20 on how higher US tariffs could affect the global economy at a meeting of the grouping’s finance leaders this month in Washington.
“The impact of US tariff policy on the global economy is highly uncertain,” Ueda told Japan’s parliament. “But depending on the range and scale of US tariffs, they could have a big impact on each country’s trade activity.”
He added, “Another big question is how the tariffs could affect the sentiment and spending of households and companies.”
While higher tariffs are likely to push up US inflation in the short term, the longer-run effect is uncertain as the higher duties could cool US growth and curb its price growth, Ueda said.
The White House has said the global reciprocal tariffs Trump is expected to announce would take effect immediately, along with a tariff of 25 percent on auto imports on April 3.
Activity slumped in March in factories around the world, from Japan to Britain and the United States, as businesses braced for the new US tariffs, global surveys have shown.
The fallout from the US trade curbs are among the key themes likely to be discussed by finance leaders gathering for the spring IMF and G20 meetings later this month.
The BOJ has not confirmed if Ueda will attend the G20 meetings, though the governor and Japan’s finance minister usually attend.
Analysts say the impact of US tariffs on Japan’s economy will be key to how soon the BOJ raises interest rates.
The BOJ next holds a policy meeting from April 30 to May 1. A Reuters poll showed many analysts expect its next rate hike in the third quarter, most probably in July.
REUTERS
