Daiwa estimates Trump’s proposed 25% tariffs could reduce Japan’s real GDP by 1.1% – TradingView

Economic Analysis of Proposed US Tariffs on Japan and Implications for Sustainable Development Goals

Projected Economic Impact

An economic assessment by Daiwa Securities outlines the potential consequences of proposed United States tariffs on Japanese goods. The analysis focuses on the direct impact on Japan’s economic performance and its alignment with global development objectives.

• A proposed 25% reciprocal tariff is estimated to result in a cumulative 1.1% reduction in Japan’s real Gross Domestic Product (GDP).
• Projections for Fiscal Year 2025 indicate a sharp deceleration in real GDP growth to a range of 0.1%–0.2%, down from an expected 0.8% in Fiscal Year 2024.

Implications for SDG 8: Decent Work and Economic Growth

The forecasted economic slowdown presents a significant challenge to Japan’s progress towards Sustainable Development Goal 8, which promotes sustained, inclusive, and sustainable economic growth, full and productive employment, and decent work for all.

1. Threat to Economic Growth (Target 8.1): The potential 1.1% GDP reduction directly contravenes the objective of sustaining per capita economic growth and achieving higher levels of economic productivity.
2. Employment and Labour Market Stability: While a major shock is not anticipated, the economic contraction could strain the labour market. Persistent labour shortages are identified as a concurrent factor that may sustain inflationary pressures, complicating efforts to ensure stable and decent work.

Challenges to SDG 17: Partnerships for the Goals

The implementation of such tariffs would represent a departure from the principles of international cooperation that underpin the Sustainable Development Goals, particularly SDG 17.

• Undermining Global Trade Systems (Target 17.10): The move towards reciprocal tariffs challenges the promotion of a universal, rules-based, open, and equitable multilateral trading system under the World Trade Organization.
• Erosion of Global Partnerships (Target 17.16): Unilateral trade measures can weaken the global partnership for sustainable development, hindering the collaborative efforts required to achieve shared economic and social goals.

Monetary Policy Outlook and Broader SDG Considerations

The domestic policy response to these external pressures will be critical. The Bank of Japan is expected to navigate a complex environment of slowing growth and persistent inflation.

• The central bank is projected to continue with gradual interest rate hikes, prioritizing the management of inflation over easing policy to stimulate growth.
• This economic environment has broader implications for other goals, including SDG 9 (Industry, Innovation, and Infrastructure), as reduced economic activity could limit investment, and SDG 10 (Reduced Inequalities), as economic downturns can disproportionately impact vulnerable populations.

Analysis of Sustainable Development Goals (SDGs) in the Article

1. Which SDGs are addressed or connected to the issues highlighted in the article?

• SDG 8: Decent Work and Economic Growth

  The article is fundamentally about economic performance. It discusses the potential negative impact of trade tariffs on Japan’s economy, focusing on metrics like Gross Domestic Product (GDP). The core issue is a projected economic slowdown, which directly relates to the goal of promoting sustained, inclusive, and sustainable economic growth.

• SDG 17: Partnerships for the Goals

  This goal includes targets related to promoting a universal, rules-based, and equitable multilateral trading system. The article’s subject, “Trump’s proposed 25% reciprocal tariffs,” is a direct challenge to such a system and highlights the fragility of international trade partnerships, which are a key component of SDG 17.

2. What specific targets under those SDGs can be identified based on the article’s content?

• Target 8.1: Sustain per capita economic growth

  This target aims to sustain economic growth in accordance with national circumstances. The article directly addresses this by forecasting a “sharp slowdown” in Japan’s economic growth. The estimate that tariffs “could reduce Japan’s real GDP by 1.1% cumulatively” and the projection of “real GDP growth of just 0.1%–0.2% for FY2025” are central to this target.

• Target 17.10: Promote a universal, rules-based, open, non-discriminatory and equitable multilateral trading system

  This target focuses on fostering stable and open international trade. The article’s discussion of “proposed 25% reciprocal tariffs” describes a potential trade barrier that runs counter to the principles of an open and non-discriminatory trading system, making this target highly relevant to the issue.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

• Indicator 8.1.1: Annual growth rate of real GDP per capita

  The article explicitly provides data points that serve as this indicator. It mentions the projected “real GDP growth of just 0.1%–0.2% for FY2025,” a slowdown from “0.8% growth in FY2024,” and a potential cumulative reduction of “1.1%” in real GDP. These figures are direct measures used to track progress toward Target 8.1.

• Indicator 17.10.1: Worldwide weighted tariff-average

  While the article does not provide a worldwide average, it specifies a key data point relevant to this indicator: the “proposed 25% reciprocal tariffs on Japanese goods.” This figure is a direct measure of a trade barrier, which is what this indicator is designed to track.

• Other Implied Factors

  The article also mentions “ongoing labour shortages” and “inflationary pressures.” While not tied to a specific numbered indicator in the text, these are critical economic factors that influence policies related to SDG 8 (Decent Work and Economic Growth) and are monitored to assess overall economic health.

4. Summary Table of SDGs, Targets, and Indicators

Source: tradingview.com