Japan Business Survey Index Large Manufacturing Firms

Japan’s Business Survey Index for large manufacturing firms dropped to -4.8% in the second quarter of 2025, down from -2.4% in the previous quarter. The result defied market expectations for a rebound to 0.8%, marking the lowest level since Q1 2024. The deterioration reflects mounting challenges for Japan’s export-driven economy, which is struggling under the weight of new trade barriers introduced by US President Donald Trump. In early April, the US imposed sweeping reciprocal tariffs—initially a 20% levy on Japanese goods and a 25% tax on auto imports—before shifting to a flat 10% tariff on all countries except China. The BSI, based on a survey of large Japanese manufacturers, serves as a key gauge of economic health in a country heavily reliant on industrial output. Despite the current slump, manufacturers are optimistic about the months ahead, projecting a sharp rebound to 5.7% in Q3 and 8.4% in Q4.