The U.S. has remained extremely focused on reducing its trade deficit by making a lot of drastic changes to its existing practices in place. The momentum of the Japanese Yen has since continued to rally in despite the negative news that the U.S. may target Japanese exports.
New data showed that recent wage growth had not increased and remained flat, after an exciting result in June when figures showed a 3% increase, its average cash earnings came back down to 1.5% in July.
Towards the beginning of the financial year, many financial economists had suggested and speculated that wage inflation would make the Bank of Japan reconsider its monetary policy.
Japan’s trade imbalance is currently the third biggest of all its major U.S. trading partners, which are just behind China and Mexico. The total figure amounts to $54 billion trade deficit, which is largely due to automobiles, and other parts that make up a third of the overall figure.
If the Japanese economy is hit with higher tariffs then it will make it extremely painful for automakers including Toyota, Honda and Nissan that makes a big percentage in the U.S. vehicle market.
U.S. and Japanese officials are set to hold a series of meetings towards the end of September at the U.N. General Assembly.