By Satoshi Sugiyama
TOKYO (Reuters) -Japan’s factory output fell more than expected in March, dragged down by its key motor vehicles industry, as U.S. President Donald Trump’s tariff policies rattle manufacturers and a whole host of industries globally.
Japan’s trade negotiator Ryosei Akazawa will be heading to the United States on Wednesday to meet his counterparts for a second round of tariff negotiations.
Industrial output fell 1.1% in March from the previous month when it rose 2.3%, worse than a median market forecast for a 0.4% fall, the Ministry of Economy, Trade and Industries (METI) data showed.
While manufacturers surveyed by the ministry expect seasonally adjusted output to increase 1.3% in April and climb 3.9% in May, a METI official cautioned that it is too early for optimism.
“The environment surrounding production remains highly uncertain,” the official said.
Motor vehicle production was down 5.9% in March from the previous month, the METI said. Specifically, regular passenger car output fell 4.1% in March because of lower exports, while small vehicle production slumped 23.2% on auto part supply disruption.
Trump introduced a 25% tariff on car and truck imports and announced a 24% tariff on all Japanese goods, though the latter was subsequently slashed to 10% for 90 days. The sweeping U.S. tariffs are rattling Japan’s industrial supply chains, particularly for automobiles, the country’s biggest export item.
Japan exported 21 trillion yen ($147.45 billion) worth of goods to the United States last year, with automobiles representing roughly 28% of the total.
The METI official said manufacturers expressed their concerns about U.S. tariffs though the government isn’t aware of any changes in their production plans.
Still, Japanese companies are worried Trump’s protectionist policies would spark a broader global slowdown.
Top Japanese construction machinery maker Komatsu on Monday forecast a 27% decline in operating profit this financial year due to a stronger yen and new U.S. tariffs which will have an impact of more than $650 million.
Separate data showed Japanese retail sales rose 3.1% in March from a year earlier, slightly less than the median market forecast for a 3.5% rise.
($1 = 142.4200 yen)
(Reporting by Satoshi Sugiyama; Editing by Jacqueline Wong and Shri Navaratnam)
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