Japan Mulls Extra Budget Amid Tariff, Inflation Pressures

Japanese Prime Minister Shigeru Ishiba said the government is prepared to compile an extra budget to mitigate the economic impact of U.S. tariffs, acknowledging mounting political pressure after his coalition’s recent upper house election loss. “We will compile one if necessary, taking into account discussions with other parties,” Ishiba told parliament Monday when asked about including tax cuts in the budget. A stimulus package would likely be submitted during an extraordinary parliamentary session in September. While Japan’s recent trade deal with the U.S. eased tariffs on some goods, uncertainty remains over when auto tariffs will be reduced from 25% to 15%. Analysts expect the extra budget could total around JPY 10 trillion, adding to Japan’s already record JPY 115.5 trillion budget and worsening fiscal strain. Ishiba remains cautious about cutting Japan’s 10% sales tax, which opposition parties want lowered to ease the burden of rising food prices and support consumption.