Japan remains cautious on economic impact of tariffs in August report

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TOKYO (Reuters) -The Japanese government reiterated concerns about the risks of U.S. trade policies to economic growth, prompting a downgrade of its view on corporate profits, in a monthly report released on Wednesday.

While Japan’s economy grew much faster than expected in the April-June quarter, analysts warn global economic uncertainties fuelled by U.S. tariffs could weigh on the world’s fourth-largest economy in the coming months.  

In the Cabinet Office’s monthly economic report for August, the government maintained an overall assessment that the economy is recovering “at a moderate pace,” although the effects from U.S. tariffs are seen in some areas.

On corporate profits, the government said improvements in the area appear to be pausing due to U.S. trade policies, downgrading its assessment for the first time in eight months.

“The assessment reflects the year-on-year decline seen in the financial results of listed companies for the April-June period,” a Cabinet Office official told a press briefing.

Washington and Tokyo agreed in July to set a reduced 15% tariff on imports from Japan in exchange for a $550 billion package of U.S.-bound investment through government-backed loans and guarantees, but details of its contents remain thin.

Elsewhere in the report, the government upgraded its evaluation of public investment but downgraded its view on housing construction. 

On private consumption, which accounts for more than half of Japan’s economy, the government retained its view that it is picking up.

(Reporting by Satoshi Sugiyama; Editing by Sam Holmes)