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Why is Japan's economy contracting now?
Japan's GDP declined by 0.4% in the third quarter, mainly due to weaker exports and stagnant domestic demand. U.S. tariffs on auto exports and other goods have reduced Japan's export volume, especially in auto and auto parts sectors. Additionally, political uncertainty and flat consumer spending have contributed to the economic slowdown.
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How do U.S. tariffs affect Japanese exports?
U.S. tariffs, set at 15%, have made Japanese goods more expensive in the U.S. market, leading to decreased demand. Auto exports, a significant part of Japan's economy, have been particularly impacted, with a 1.2% drop in exports amid ongoing trade tensions. Even with a lower tariff rate negotiated in July, the impact continues to weigh on Japan's export sector.
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What industries are most hit by these tariffs?
The auto and auto parts industries are the most affected by U.S. tariffs. These sectors rely heavily on exports to the U.S., and tariffs have increased costs and reduced competitiveness. Other affected sectors include machinery and electronics, which also face challenges due to global trade disruptions and tariffs.
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Will Japan recover from this economic slowdown?
Recovery depends on multiple factors, including the resolution of trade tensions, domestic policy measures, and global economic conditions. Japan is implementing measures to stimulate growth, focusing on sectors like AI and semiconductors. However, ongoing trade disruptions and internal challenges mean the recovery may take time.
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What is Japan doing to boost its economy?
Japan is working on policies to stimulate domestic demand and diversify its economy. Recent efforts include investing in advanced technology sectors like AI and semiconductors, and seeking trade agreements to reduce tariffs. The government also aims to support industries most affected by global trade tensions to foster economic resilience.