Japan Rolls Out Defensive Stimulus as Trump’s Tariffs Bite—Guess Who’s Paying?

Tokyo fires back with fiscal artillery as trade wars escalate. The ¥2.3 trillion package targets export relief—because nothing says ’free market’ like government-funded lifelines.

Key moves: Subsidies for manufacturers, SME cash injections, and—naturally—more bureaucratic oversight. Because if there’s one thing that fixes protectionism, it’s another layer of red tape.

Meanwhile, the BOJ keeps printing yen like it’s a meme coin. Your move, Wall Street.

Ishiba unveils economic stimulus package to counter the effects of tariffs

To counter US tariff impacts, Japan unveiled measures including support for corporate financing, a ¥10 per litre gasoline subsidy, and partial coverage of electricity bills for three months starting July.

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— NordFX (@NordFX) April 25, 2025

Japan’s Prime Minister Ishiba on Friday said the government had compiled an emergency economic package to reduce any impact on industries and households from the new U.S. import tariffs. A government document also revealed that the package includes support for corporate financing and subsidies to lower gasoline prices by 10 yen ($0.07) a liter and partially covers electricity bills for three months from July.

According to Ishiba, a larger scope of firms will also be eligible for low-interest loans extended by government-backed banks to help small and mid-sized companies more vulnerable to economic swings. 

Economy Minister Ryosei Akazawa said the package could be financed by a reserve fund, eliminating the need to compile an extra budget. Akazawa, Japan’s top trade negotiator, will visit Washington next week for a second round of trade talks.

“I have instructed cabinet members to make the utmost efforts to aid firms and households that have been worried about tariff impact.”

~ Shigeru Ishiba, Prime Minister of Japan

The Japanese government hinted that it will consider additional measures to boost domestic consumption depending on how much the U.S. tariffs impacted Japan’s massive automotive industry. It also announced on Thursday that it was considering increasing soybean imports from the U.S. as part of negotiations.

Ishiba says the U.S. tariffs could greatly ‘hurt’ Japan’s domestic industry 

Ishiba warned during a meeting to map out the package that the U.S. tariffs could ‘substantially hurt’ domestic industries that supported the Japanese economy, such as automobiles and steel. He emphasized the necessity of Tokyo and Washington working together for mutual benefit.

According to the Prime Minister, it was extremely important for Japan to clearly convey to the U.S. that Japanese enterprises had made a significant contribution to the U.S. economy through investment and job creation. Ishiba said on April 22nd that Japan would emphasize the importance of free trade in bilateral tariffs during negotiations with the U.S., despite Trump pursuing his protectionist and growth-stifling ‘America First’ policy. Akazawa’s trip to the U.S. is viewed as an opportunity for Japan to push for exemptions or revisions to the sweeping tariffs imposed by Trump, which Tokyo has said are a major threat to the stability of global trade.

Ishiba’s government suggested that it could introduce additional steps–depending on the outcome of the second round of talks–to prevent the performance of Japanese manufacturers from slumping and consumer confidence from deteriorating sharply. Trump has imposed higher import duties on cars, steel, and aluminum, with a baseline 10% levy remaining in place despite the 90-day pause for ‘reciprocal tariffs.’

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