Japan Reuters Tankan Index

The Reuters Tankan sentiment index for manufacturers in Japan jumped to +9 in April 2025 from -1 in March, marking the highest reading since August last year. Despite the upbeat current sentiment, the outlook for the next three months has darkened due to escalating concerns over U.S. trade policy. The index is projected to fall back to zero as Japan braces for a 10% tariff on its exports to the U.S. and a steep 25% duty on automobiles. Export-driven industries, particularly automotive and machinery, are sounding the alarm over declining orders and increased client caution. Uncertainty surrounding U.S. tariffs remains the dominant concern, though some companies also pointed to weakening demand from China and the impact of low-cost Chinese goods undercutting domestic sales.