TOKYO -- Many Japanese businesses see opportunities in U.S. President-elect Joe Biden's climate policy, but the automobile sector is a bit more cautious after being buffeted by incumbent Donald Trump's regulatory swings.
"If there are changes in the environmental regulations and larger demand for electric vehicles, there will be a growth in demand for aluminum material for lighter auto bodies," said Miyuki Ishihara, president of UACJ, Japan's largest maker of flat-rolled aluminum.
The steel industry echoed Ishihara's sentiment.
"Investment in EVs and stronger regulations against gasoline vehicles will provide tailwinds for thin but strong high-performance steel sheets and EV steel sheets, where Japanese steelmakers are strong," said an executive at a major Japanese steel company.
Biden has pledged to return the U.S. to the global Paris Agreement on climate change. The former vice president also has promised to add more EV recharging stations, further reversing Trump's deregulation of environment protections.
The president-elect's anticipated departure from Trump's trade policy offers another potential boon for Japanese steelmakers. The Trump administration levied additional tariffs on steel and aluminum imports in the name of protectionism.
"I strongly anticipate heading toward improvements on measures limiting [U.S.] imports of steel, based on the final agreement on the Japan-U.S. trade accord," said Eiji Hashimoto, chairman of the Japan Iron and Steel Federation. Hashimoto also serves as president of Nippon Steel.
"We expect the U.S. to play a role in grappling in big global issues such as climate change and international problems," Toshiba President Nobuaki Kurumatani said. "The predictably of U.S. [policymaking]. This should tend to give a greater sense of stability to the global economy."
"I see the spurring on of free trade," Japan Display President Minoru Kikuoka said. As for U.S.-China trade frictions, "because both are important countries, we would like as much predictability as possible in matters such as trade negotiations in order to proceed with business decisions."
"We expect more public works investment, which should benefit our U.S. subsidiary," said Yasuo Kotera, an executive vice president at construction company Obayashi. "But there is the possibility that higher corporate taxes will lower public investment."
But some executives fear Biden's climate agenda will hurt Japanese companies. Lion President Masazumi Kikukawa, who oversees a manufacturer of household cleaners and other daily necessities, is on alert for tighter provisions against hydraulic fracturing, or fracking, a technique to extract oil and gas from rock by injecting water and chemicals.
"If conditions for [oil and natural gas] output are affected, prices of petroleum-based raw material and plastic material such as containers could be impacted," Kikukawa said.
"There is a chance liquefied natural gas development will lag inside the U.S., which could impact LNG transport operations," said a source at a large Japanese marine shipper.
Japan's auto industry, a sector heavily exposed to Trump's environmental and trade policies, has been conspicuously cautious in statements made regarding Biden.
Mazda Motor President Akira Marumoto declined to elaborate on how a Biden presidency will affect the automaker as he reported quarterly earnings on Monday.
"Since various policies will emerge going forward, we'll consider our response as we monitor the situation," Marumoto said.
Toyota Motor took fire in early January 2017 when Trump, then the president-elect, tweeted his grievance over the company's investment in a Mexican plant. The following week, Toyota President Akio Toyoda announced plans to invest $10 billion on U.S. soil, touting the Japanese automaker's contribution to American job creation.
Toyoda now doubles as chairman of the Japan Automobile Manufacturers Association, and the organization has revealed no definite comments or expectations regarding Biden. It appears that JAMA will await and examine concrete policies issued by the Biden administration before taking the next step.
"The environmental regulations will probably become tighter," said an executive at a major Japanese automaker. "We have no choice but to respond accordingly."
It remains to be seen how much freedom Biden will have to advance his agenda. Though Democrats maintained their majority in the U.S. House of Representatives, the Republicans look likely to keep control of the Senate, setting the stage for a divided government.
In that scenario, Biden's policies "may trend in the middle," said Yukio Yokoyama, chief financial officer at Nissin Foods Holdings.