🇯🇵 Strong Domestic Demand Offsets Trade Tensions

Japanese businesses boosted their investments in early 2025, signaling confidence in the economy despite growing global trade friction 🌐.

🏭 Capital spending (excluding software) jumped 6.4% year-over-year, according to Japan’s Ministry of Finance — far exceeding the expected 3.8% increase and a big turnaround from the 0.2% dip in the previous quarter.

💻 Including software, investments rose even further, showing broad-based confidence across industries.

📊 Corporate sales climbed 4.3%, while profits increased 3.8% — a clear sign that companies are ready to invest in technology and productivity to keep up with demand and labor shortages.

⚠️ Exporters Wary of Rising U.S. Tariffs 🇺🇸🔁🇯🇵

Despite strong domestic performance, Japan’s export sector is facing rising uncertainty due to potential new U.S. tariffs set to begin as early as July 2025.

🚗🛠️ Industries like steel and automotive, key parts of Japan’s exports, are most vulnerable.

The fear: higher costs, pricing issues, and global competitiveness risks.

🛫 Prime Minister Shigeru Ishiba is considering a diplomatic visit to Washington ahead of the G7 summit to ease tensions and potentially reach a bilateral trade agreement.

🤝 Top negotiator Ryosei Akazawa is also set to return to the U.S. this week for talks aimed at slowing or stopping the tariff plans.

🚀 Government Pushes Capital Investment for Long-Term Growth

Japan’s government and business leaders agree: now is the time to invest.

🏗️ A panel under METI (Ministry of Economy, Trade and Industry) is urging companies to redirect excess corporate funds into productive capital investment — not just stock buybacks.

The focus: strengthening industry, boosting innovation, and building economic resilience.

🌱 The Bank of Japan is especially optimistic about investments in digital transformation and decarbonization, key sectors for future-proofing the economy.

💡 With the right policies and smart diplomacy, Japan aims to stay strong — at home and on the world stage. #MyCOSTrade

💬 Bottom Line:

Even as global trade headwinds grow, Japan's economy is showing strength 💪. Domestic investment is up, confidence is solid, and leaders are working hard to protect exporters and build a future-ready economy 🌍🔧.