Uncertainty caused by US tariffs makes the UK more attractive to Japanese businesses
The uncertainty caused by US tariffs makes the UK more attractive to Japanese businesses, say leading audit, tax and business advisory firm, Blick Rothenberg.
Yusuke Takanishi, a partner at the firm, said: “Following the reintroduction of US tariffs, the long-standing and stable investment relationship between the UK and Japan may become even more valuable in the years ahead.”
He added: “The new US tariffs apply to many major trading partners, including Japan, under a different legal and policy framework from previous trade measures. This is despite the fact that Japan has worked hard to strengthen economic ties with the United States over recent years. Japanese companies have expanded manufacturing facilities, invested in infrastructure, strengthened supply chains and created jobs across the US.”
Yusuke said: “The latest US measures suggest that the relationship between investment and trade policy may not be as straightforward as businesses would hope. Even where economic cooperation is deep and long-standing, companies may still find themselves exposed to new tariffs introduced through a different policy route.”
He added: “Against this backdrop, developments in the UK deserve attention from Japanese businesses. The New Prime Minister Andy Burnham has outlined an agenda focused on re-industrialising Britain, investing in infrastructure, strengthening regional economies and developing a longer-term growth strategy. While details will emerge over time, the direction of travel appears to be towards rebuilding industrial capacity and creating conditions for long-term investment.”
Yusuke said: “For Japanese companies operating in the UK, and for UK businesses with interests in Japan, this creates an interesting contrast. At a time when global trade relationships are becoming more complicated and less predictable, the UK–Japan relationship remains rooted in long-term investment, deep commercial ties and mutual trust. The conversation is therefore moving beyond simple market access. Increasingly, businesses are asking where they can make investment decisions with confidence over a five- or ten-year horizon.”
He added: “From an accounting, tax and compliance perspective, Japanese businesses should therefore be looking beyond the immediate impact of tariffs. Supply chain structures, transfer pricing policies, customs arrangements, governance frameworks and Environmental, Social, and Governance (ESG)-related compliance all need to be reviewed in light of a more uncertain global environment. In my experience, discussions with management teams today are becoming less about finding the lowest-cost location and more about building resilience and predictability into business models.”
Yusuke said: “The latest US tariff development also reinforces what was seen in Japan’s May trade data. In May, Japan’s external sector was improving, but not yet in a broad-based or fully convincing way. The headline trade figures looked encouraging, but export volume growth remained modest, suggesting that part of the improvement was still being driven by currency effects and pricing rather than a significant strengthening of underlying demand.”
He added: “June’s figures are stronger. Japan’s exports increased by 19.3% year-on-year, supported by semiconductor-related demand and AI investment, while imports rose by 25.4%, driven in part by higher energy costs and the weaker yen. But the current environment should not yet be described as a fully established export-led recovery. Japanese businesses continue to face rising input costs, geopolitical uncertainty and renewed questions around global trade policy.”
Yusuke said: “The Bank of Japan’s latest Regional Economic Report broadly supports this balanced view. All nine regions were assessed as either recovering or showing moderate improvement, pointing to continued resilience but not necessarily a rapid acceleration in economic activity.”