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The Japanese business community is bracing for the possibility of a rise in protectionism, a stronger yen and a breakdown of the Trans-Pacific Partnership trade and investment initiative after Donald Trump becomes the next U.S. president.
In the aftermath of Tuesday's election, export-focused Japanese companies face increasingly murky earnings prospects. The automotive industry, in particular, could take a heavy blow from Trump trade policies.
Trump repeatedly slammed Japanese autos and other exports during his campaign. "We are disappointed by the election outcome," said an executive at a carmaker. "This gives us something new to worry about after Brexit."
Japan's currency advanced as high as 101 yen the dollar Wednesday before weakening. "If the yen strengthens beyond 100 to the dollar, the underlying assumption of building 10 million autos a year in Japan and exporting 5 million may crumble," said a senior executive at another automaker.
And if Japan's export machine slows, even passenger volume on bullet trains between Tokyo and Osaka may suffer, said Koei Tsuge, president of Central Japan Railway, or JR Tokai, who called Trump's win "a bolt from the blue."
Barriers to trade
The future of U.S. relations with Mexico is also a source of uncertainty for Japan's auto industry and its suppliers. "If Trump's words become reality, we will be in big trouble," warned Takuya Shimamura, president of Asahi Glass, which started up a new automotive glass plant in Mexico this past April.
Many manufacturers use Mexico as a base for exporting cars, auto parts and materials to the U.S. Nissan Motor will open a joint-venture plant in Mexico next year, and Toyota Motor plans to build factory there in 2019.
Trump has declared he wants to build a wall at the Mexican border. More troubling for Japanese companies is the possibility that his administration may seek to renegotiate the North American Free Trade Agreement, which he has criticized -- a move that could force them to rethink their North American production and sales strategies.
Construction equipment builder Komatsu has been singled out by Trump as benefiting from a weak yen in competition with U.S. rival Caterpillar. Komatsu President Tetsuji Ohashi kept his reaction to the real estate mogul's victory terse: "We will continue to watch global economic trends."
Steelmakers also also nervous. Earlier this year, the U.S. decided to slap anti-dumping duties on hot- and cold-rolled steel from Japan. Some expect that with Trump in the White House, such retaliation could become more frequent.
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Others fear that the movements of people and goods may stagnate. "We are worried about the impact on cross-border logistics between the U.S. and Mexico," said Nobutoshi Torii, president of Kintetsu World Express, which transports automobiles.
If the TPP fails to take effect, international cargo traffic will be hit hard. ANA Holdings President Shinya Katanozaka expressed concern that demand for airline service between Japan and the U.S. may languish.
Yet some Japanese executives voiced hope that a new leader with abundant business experience will help revitalize the U.S. economy. While preparing for a possible negative impact of Trump's presidency, companies here are still trying to take a measure of the man.
"With his wealth of business experience, Mr. Trump has mastered what makes sense for the bottom line and what makes people tick," said Masahiro Okafuji, president of trading house Itochu.
"When the U.S. economy does well, the global economy does, too," Okafuji said. "I have high expectations for his abilities."
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