Japan, Mexico Face Economic Challenges Amid US Tariff Uncertainty

The US's imposition of aggressive tariffs under President Trump has created significant economic uncertainty across North America and Asia. In Mexico, the economy narrowly avoided recession in the first quarter of 2025, with modest GDP growth, but business sentiment remains pessimistic as new tariffs dampen investment and key export sectors like automotive and metals suffer. Mexican growth forecasts have been sharply downgraded, with economists citing sluggish consumption and weak industrial output, and most analysts view the tariffs' impact as negative or very negative. Meanwhile, Japan's economic outlook has also dimmed, as the Bank of Japan lowered its growth and inflation forecasts in response to US trade strategies, resulting in a weaker yen and mixed market reactions. Both countries are adjusting policies to stabilize their economies amid ongoing US trade pressures, with Japan considering a possible rate hike and Mexico restructuring supply chains to retain USMCA trade benefits. This regional economic strain reflects broader concerns about the global impact of US tariff policy and the risk of recession.