By Megumi Fujikawa

TOKYO--Local Japanese companies are getting more concerned about the impact of President Trump's higher tariffs, which have made it difficult to create business plans for the new fiscal year, according to the Bank of Japan's regional economic report.

In the quarterly report released Monday, the BOJ maintained its economic assessment for all of the country's nine regions. The economies are recovering in all areas, but uncertainties, including the impact of trade frictions on production and corporate profits, are increasing, BOJ branch managers said.

"Overseas customers refrained from making purchases amid uncertainty surrounding the outcome of the U.S. presidential election, and the trend is continuing even after the inauguration of the new administration because there is no conclusion in sight regarding trade policies," said a production machinery maker in Kagawa prefecture located on Japan's western island of Shikoku.

An electrical machinery maker in Osaka said it had been difficult to incorporate the potential impact of U.S. trade policies into its business plan, according to the regional economic report.

BOJ Gov. Kazuo Ueda has said that the central bank would raise interest rates further if the economy and prices develop in line with its projections. The central bank maintained the policy rate at 0.5% at its meeting in March, saying that uncertainty surrounding the global economy was increasing.

Expectations for an immediate BOJ rate hike have been receding after President Trump imposed higher tariffs last week. Economists expect auto tariffs to have a significant impact on the Japanese economy as the sector is the nation's core business and has a very broad base.

Japan has been seeking exemption from the U.S. tariffs. Prime Minister Shigeru Ishiba has said that the government is setting up consultation desks across the nation and providing financial aid to small companies affected by the U.S. move.

Write to Megumi Fujikawa at megumi.fujikawa@wsj.com

(END) Dow Jones Newswires

April 07, 2025 02:02 ET (06:02 GMT)

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