The Japan External Trade Organization says the Trump tariffs imposed on auto imports could reduce Japan's gross domestic product by 0.3 percent.



Research Fellow Isono Ikumo at JETRO's Institute of Developing Economies says the levies are expected to dent the economy by reducing output at Japan's vehicle makers.



He says the tariffs will also have a damaging trickle-down effect on companies in the auto industry supply chain.



He adds that the tariffs may work as Trump intends to expand automobile manufacturing in the US and boost jobs, but this comes with a downside.



The tariffs and reciprocal levies on trading partners could drive up US inflation and cut the country's GDP by as much as 2.5 percent. He says this has global implications.



"The changes in US trade policy make it very difficult for companies to decide on new investments and this could slow global economic growth," he said. "Companies will now need to consider whether to separate off the US from other supply chains and how to reorganize them."



Isono emphasizes that the shifts in how the US does business with the rest of the world is complicating business strategies everywhere.