TOKYO -- The Japanese corporate community celebrated both the new year and the yen-fueled bull market at a gathering Thursday, only to have its spirits dampened half a day later by U.S. President-elect Donald Trump's tweeted "NO WAY!" at Toyota Motor.
Sadayuki Sakakibara, chairman of the Keidanren business lobby, was ebullient about the likely impact of Trumponomics in a news conference Thursday. "The Trump effect will last two years," he said.
Toyota President Akio Toyoda said the automaker would not cancel plans for a new Mexican plant -- to which Trump apparently retaliated. Toyota presents an easy target for his "America first" doctrine as a poster child for not only corporate Japan, but the worldwide auto industry.
But this represents more an act of corporate obstruction than mere intervention. The "good Trump" exemplified by aggressive fiscal spending and regulatory easing is giving way to the "bad Trump" who strong-arms corporations into altering strategies. The Japanese government and private sector face the difficult task of figuring out how to deal with the world's largest economy.
The drama playing out needs to be viewed clinically. Trump has yet to take office, and even senior Republican officials are strongly criticizing him. While the president-elect may enjoy singling out companies and making them invest in the U.S., whether this is truly in America's interests is doubtful.
The U.S. imports roughly 2 million autos a year from Mexico. And in value terms, about 30% of autoparts imports come from Mexico. If Trump halts free trade between the neighbors or forces manufacturing jobs back onto American soil, where costs are higher, U.S. consumers would end up paying more for vehicles.
The unmeasured language of Trump is leading global companies to see America as an unpredictable nation. The president-elect has also yet to fully address rising concerns of cronyism. These factors would likely soften investment in the U.S., which is being viewed much as the U.K. has been since its people voted to leave the European Union.
Prime Minister Shinzo Abe was the first world leader to meet with Trump after his victory and seeks to hold a summit at an early date. The world will be watching to see if Abe can fully convey a determination to maintain free trade. Corporate Japan would also do well to not be swayed by Trump's words and to instead focus on calmly drawing up reality-based U.S. business strategies.