New tariffs to hurt Japan's investment capacity in US: minister

The new US reciprocal tariffs on imported goods from all countries will undermine Japan's ability to invest in the country, Minister of Economy, Trade and Industry Yoji Muto said April 3.

Muto said this was the message he delivered during an online meeting with US Secretary of Commerce Howard Lutnick, just hours before the US announced a new set of reciprocal tariffs on April 2, including a 24% tariff on Japan.

"I explained in detail that US tariff measures would undermine the investment capacity of Japanese companies in the US, which would also have a negative impact on the US economy," Muto told a press conference in Tokyo.

"I engaged in an open discussion about how cooperation based on mutual benefits between Japan and the US can take place without relying on tariffs," Muto added, declining to elaborate further.

On April 2, US President Donald Trump announced a sweeping new round of tariffs on US imports from major trading partners, outlining a 10% baseline minimum tariff on all imported goods, set to take effect on April 5.

"It is extremely regrettable that the reciprocal tariff measures were announced without Japan being excluded," Muto said, adding that the country "will continue to strongly urge the US to exclude Japan from tariff measures."

The US was Japan's largest export market in 2024, with exports valued at Yen 21.295 trillion ($144.41 billion), according to data from the Ministry of Finance. Motor vehicles accounted for Yen 6.026 trillion, or 28.3%, marking the largest share of the country's total exports, MOF data showed.

The US' 25% tariff on automobiles separately took effect after 12:01 am Eastern Daylight Time (0401 GMT) on April 3.

As vehicles and automotive parts are closely linked to the steel and aluminum markets, the move is expected to add another layer of uncertainty, as the US has already imposed a 25% tariff on all steel and aluminum imports.

Negative impact

Trump's barrage of new tariffs comes as his administration prioritizes the development of a natural gas pipeline and LNG project in Alaska, while several Japanese companies have expressed interest in procuring more US LNG and participating in LNG projects in the country.

The reciprocal tariffs from the US are expected to increase procurement costs for imported materials and equipment, which could have "negative impacts on the establishment of natural gas supply systems, including the development of domestic natural gas resources and LNG exports, as well as the economic benefits associated with project implementation," Takayuki Nogami, chief economist at the Japan Organization for Metals and Energy Security, said.

"Therefore, when constructing pipelines and liquefied natural gas facilities [in Alaska], there is an increased risk that related costs will escalate, which could further pressure the profitability of investments in these projects."

"This situation may necessitate a reevaluation of the business, including cost reductions, which could lead to the need for more time for project implementation," Nogami added.

Alaska LNG

During his visit to Washington in March, Muto said he discussed energy matters, including the Alaska LNG project, with his US counterparts.

"Regarding Alaska, discussions were held on Japan-US cooperation in the energy sector, including Alaska LNG," Muto said late March 10 in Washington, declining to elaborate.

In his speech to Congress on March 4, Trump said, "My administration is also working on a gigantic natural gas pipeline in Alaska, among the largest in the world, where Japan, South Korea and other nations want to be our partners with investments of trillions of dollars each."

"It will be truly spectacular. It is all set to go," Trump added.

During a courtesy call on Muto by Alaska Governor Mike Dunleavy in Tokyo on March 28, they "confirmed the importance of Japanese companies in creating investments and jobs in Alaska, as well as exchanged opinions on energy projects in the state of Alaska," METI said in a statement.

When asked to comment on whether JERA is considering participation and procurement from the Alaska LNG project, a company spokesperson said, "Regarding Alaska LNG, we would like to consider it as a promising procurement source from the perspective of energy security."

"When selecting procurement sources, the key consideration is whether the project will be competitive in terms of supply stability and economic viability, and we will closely monitor future developments."

The 20-million-mt/year Alaska LNG project had struggled to gain traction for years amid the state's long-running challenges, including high project costs and difficulty securing customers. This led the state to shift efforts toward turning the project over to private interests.

US-based Glenfarne, which signed a deal with the Alaskan government entity managing the proposed Alaska LNG export project, said on March 28 that it expects to reach a final investment decision on a portion of an 800-mile pipeline that would connect Alaska North Slope supplies to the export terminal in Nikiski, located on the Kenai Peninsula in the southern part of the state.

Dunleavy, speaking at the recent CERAWeek energy conference by S&P Global in Houston, said he expects the LNG project to start up within five years, with interest from Japan, South Korea and Taiwan.