#Japan #Small Businesses #Trump Tariffs #Shibuya #FORVAL

Understanding the Impact of Trump Tariffs on Small Businesses

In December 2025, FORVAL's GDX Research Institute, a leading management consultancy based in Shibuya, Tokyo, published the "BLUE REPORT Special Edition." This extensive report investigates the repercussions of the Trump tariff policies on small enterprises in Japan, a pressing issue given the inauguration of the second Trump administration earlier in January 2025.

Overview of the Trump Tariffs

Since the first Trump administration, tariffs emerged as a crucial tool of foreign trade negotiation. The renegotiation of the North American Free Trade Agreement (NAFTA) and the assessment of additional tariffs on China were significant focuses. In the U.S.-Japan context, negotiations involved steel, aluminum products, and the auto industry. Throughout this period, many sectors, particularly those reliant on exports to the U.S., exhibited growing concern regarding how these policies might impact their operations.

The term "Trump tariffs" refers to these overarching actions which could potentially disrupt various facets of the Japanese economy.

Objectives of the Report

The primary aim of the BLUE REPORT was to assess how the Trump tariffs impact small businesses in Japan and the strategies they are employing in response to these challenges. This comprehensive survey probed into the existence and extent of the tariffs' effects on small enterprises, the perceived necessity for action, and the specific measures taken along with their effectiveness.

Key Findings

1. Limited Immediate Impact:
According to the report, a majority of small businesses, approximately 66.4%, reported feeling no significant impact from the Trump tariffs at present. This statistic suggests that, at this juncture, the overall influence of these tariffs on small enterprises is modest.

2. Need for Action Recognized:
Despite a limited reported impact, 70% of the companies that stated they were affected acknowledged the necessity to implement countermeasures. Specifically, 22.4% of the affected firms strongly felt the urgency, while 47.6% recognized the need to some extent. This indicates a significant number of businesses aware of the potential ramifications of these policies.

3. Low Implementation Rate of Countermeasures:
Alarmingly, only 14.2% of the enterprises that recognized the need for action had actually taken significant steps to address the issues created by the tariffs. The majority appears to be in a state of indecision or delay regarding their response strategies, creating a noticeable gap between recognition of a problem and the action taken to remedy it.

Industry-Specific Observations

• - Among those reporting effects, approximately 23.5% cited rising costs for raw materials and components as the most significant concern. Notably, industries such as construction, manufacturing, and wholesale trade were highlighted as most vulnerable, with close to 40% of wholesalers stating they faced direct impacts from tariffs.

Challenges to Action

The inconsistency between recognizing the need for action and actually implementing strategies poses questions about the hurdles faced by small businesses. The research indicated that many companies felt uncertain about which measures to adopt and lacked information to adequately guide their decisions. Targeted assistance is vital to enable these enterprises to navigate such uncertain conditions effectively.

Meanwhile, some companies that proactively responded by adjusting pricing strategies and reevaluating supply chain relationships reported successful outcomes, including cost stabilization and improved profit margins.

Long-Term Considerations

Given the ongoing nature of the Trump administration's tariff policies, it is reasonable to assume that these effects will persist and possibly intensify across various industries. Small businesses must not only address immediate challenges but also reassess their long-term strategic frameworks, including considerations for pricing adjustments and supply chain restructuring. Engaging external expertise and availing public support could be valuable for firms struggling to adapt to these economic shifts.

Conclusion

The BLUE REPORT poignantly highlights that while many small businesses in Japan have yet to feel the immediate effects of the Trump tariffs, those affected recognize the urgency for solutions. However, the hesitance to act underscores a broader issue of uncertainty and resource constraints. As these trade policies evolve, small enterprises must cultivate resilience by exploring innovative strategies that enhance their operational capabilities, ultimately driving growth and sustainability in a challenging economic landscape.

For additional insight, refer to the full report: BLUE REPORT.