Japan wage growth expected to slow amid Trump tariffs

Slump in earnings to hit already strained manufacturers

20250422 yen and commuters

Japan's sizable wage increase was largely due to companies being pushed to address the surging prices, as well as retain workers amid the country's severe labor crunch. (Source photos by Akira Kodaka and Satoko Kawasaki)

JADA NAGUMO

TOKYO -- Risks of a sharp decline in earnings is threatening Japan's wage growth as the U.S. continues to wave its "tariff card" around the world, putting pressure on businesses that are already suffering from chronic labor shortages.

"For the past two years, Japan's wage growth was higher than inflation. But this positive cycle could come to an end next year," says Hiroshi Matsumoto, a senior fellow at Pictet Japan.

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