Overview

• Business confidence among major firms fell to –1.9 in April–June, reversing from +2.0 in the previous quarter.
• The downturn marks the first drop in sentiment in five quarters as uncertainty over U.S. tariff policy deepens.
• Government data shows manufacturers now expect recurring profits to decline 1.2% in the fiscal year ending March 2026.
• Automakers and auto parts suppliers forecast a 19.8% plunge in profits for fiscal 2025 due to anticipated steep U.S. tariffs.
• The slide underscores risks to Japan’s export-dependent economy from shifts in U.S. trade measures.