Nearly half of Japanese CEOs say they’ll boost investments in America — despite Trump’s tariffs

Nearly half of Japanese business leaders plan to increase their operations in the United States in response to President Trump’s calls for greater foreign investment despite worries over his tariff policies, according to a survey.

Nearly three in 10 executives — or 28.3% — at 144 major Japanese corporations who were polled by the Nikkei news agency said they would expand their presence in the US — while another 20.5% said they were considering similar moves.

An additional 0.8% of respondents who currently have no US operations indicated their intention to enter the market, according to the survey.

None of the surveyed companies indicated plans to scale back their existing US operations.

More than half — 50.8% — said that boosting production capacity was the main impetus while 47.6% said that interest in mergers and acquisitions was a motivating factor for expanding their US footprint while 34.9% said they were interested in startup investments.

The survey was conducted between Feb. 28 and March 19 — before President Trump’s announcement on Wednesday that the US will levy up to 25% tariffs on automotive imports.

Trump, who sees tariffs as a tool to raise revenue to offset his promised tax cuts and to revive a long-declining US industrial base, said the new import taxes will go into effect on April 2, the same date he plans to announce reciprocal tariffs aimed at the countries responsible for the bulk of the US trade deficit. 

The Nikkei poll showed about three-quarters of respondents said they were looking for opportunities to expand and grow.

Industries particularly keen on US expansion include electrical equipment, food and machinery, and materials.

Several Japanese firms have already outlined specific expansion plans.

Nissin Foods Holdings is preparing to open its first instant-noodle manufacturing facility in the US in nearly five decades, scheduled for August.

Additionally, Sumitomo Chemical intends to establish a new US plant dedicated to producing cleaning solvents for semiconductor production.

The Japanese government, led by Prime Minister Shigeru Ishiba, has supported these investment trends, pledging to significantly increase Japan’s total US investments to approximately $1 trillion.

Consequently, about 41.4% of executives surveyed have indicated their intention to either ramp up current investments or introduce new ones in the US, compared to just 16.9% in a prior survey from December.

Yutaka Kyoya, president of Mitsubishi Shokuhin, a leading Japanese food wholesaler, expressed hope for governmental support, including “tax breaks to support direct investment in the US.”

However, enthusiasm for expansion is tempered by significant worries about the Trump administration’s proposed tariffs, particularly given recent duties imposed on steel and aluminum imports, which could substantially increase operational costs.

Policy uncertainty surrounding tariffs was the predominant concern for 73% of surveyed executives.

“Given the need to curb inflation ahead of midterm elections as well, it’s not clear how much they’ll keep raising tariffs,” Suntory Holdings Chairman Takeshi Niinami said.

Nearly half of the respondents who work in manufacturing remain cautious, preferring to maintain current operations or adopt a wait-and-see approach regarding tariffs, according to the poll.

Additional concerns cited include soaring labor costs, which may cause some firms to reconsider investments altogether.

“There will probably be companies that give up because it’s not worth the soaring labor costs in the US,” noted Hideo Kumano, chief economist at Dai-ichi Life Research Institute.

Executives were also surveyed on their approaches to diversity, equity, and inclusion (DEI), particularly amid heightened political scrutiny.

Despite moves by some prominent US companies to scale back DEI initiatives, 86.6% of surveyed Japanese companies plan to uphold their DEI policies in North America.

Kubota President Yuichi Kitao emphasized the importance of such initiatives, stating, “Promoting DEI is crucial for sustainable growth.”

Acknowledging Japan’s relatively slower pace in addressing workplace diversity compared to other developed nations, Daiwa Securities Group President Akihiko Ogino said: “Now, when the global trend is slowing down, is the perfect time for Japanese companies to catch up.”