Japan braces for trade turbulence as LDP official slams ‘messy’ U.S. tariffs

Investing.com

Sun, February 22, 2026 at 5:40 PM GMT+9 2 min read

Investing.com – A senior leader in Japan’s ruling Liberal Democratic Party (LDP) has cast a skeptical eye on the escalating trade friction in Washington, labeling the current U.S. tariff environment “a real mess.”

Itsunori Onodera, the LDP’s tax research chief, warned on Sunday that the recent cycle of Supreme Court rulings and subsequent retaliatory hikes by President Trump, which saw baseline tariffs jump to 15%, is creating a climate of extreme uncertainty for Japanese exporters.

Despite the volatility, Tokyo is signaling a cautious “wait-and-see” approach rather than rushing to the negotiating table. Onodera specifically ruled out a broad renegotiation of the current bilateral trade deal.

His primary concern remains protecting the automotive sector, Japan’s largest export engine. Last year’s agreement successfully lowered auto tariffs from 27.5% to 15%. Officials fear that any attempt to reopen talks amidst the current “mess” could result in those rates being hiked back up by the White House.

Protecting Japan’s auto core and $550B in investment

The stakes for Japan are tied to a massive $550 billion investment fund pledged to the U.S. in exchange for lower trade barriers. Just this week, the Trump administration announced the first wave of these projects, including a U.S.-based data infrastructure hub and a semiconductor-grade synthetic diamond facility.

However, Onodera warned that this capital flow is not guaranteed if the U.S. domestic situation remains unstable. He cautioned that Japanese businesses might begin shifting away from U.S. markets if the “messy” trade environment persists.

For investors, the immediate focus is on how this instability impacts the bottom lines of major Japanese manufacturers like Toyota and Honda. While these companies would naturally seek refunds for tariffs recently ruled illegal by the U.S. Supreme Court, Onodera noted that such recoveries would likely be tied up in lengthy court battles.

Geopolitical stakes ahead of the Washington summit

The diplomatic tension comes at a delicate time for Prime Minister Sanae Takaichi, who is scheduled to meet President Trump in Washington next month. The summit was intended to reaffirm that the trade deal remains on track, but the recent 48-hour surge in tariff rates has shifted the agenda toward crisis management.

Takaichi must now balance the need to support Japanese industry with the necessity of maintaining a stable relationship with Japan’s most critical security ally. Market participants are watching for any signs of a “tit-for-tat” response from Tokyo, though the LDP’s current rhetoric suggests they prefer de-escalation.

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_Reporting by Simon Mugo _

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