Understanding the Impact of U.S. Tariffs, Japan’s 10% Consumption Tax, and the Invoice System on Households and Businesses

1. President Trump’s 25% Tariff Notification to Japan

In July 2025, President Trump announced a 25% additional tariff on all Japanese imports to the U.S. This move aims to address what the U.S. perceives as unfair trade and to correct trade imbalances.

The tariffs, set to begin on August 1, will affect a wide range of goods, including automobiles and food products exported from Japan.

These tariffs are expected to make it harder for Japanese companies to export to the U.S., potentially reducing sales and profits. Ultimately, this could impact jobs and the overall Japanese economy.

2. Japan’s 10% Consumption Tax and Its Burden on Households

Since October 2019, Japan’s consumption tax rate has been 10%. This tax applies to almost all goods and services, from groceries to daily necessities.

• The consumption tax is regressive, meaning it places a heavier burden on low-income households.
• While many countries reduced their consumption or value-added taxes during the COVID-19 pandemic, Japan did not lower its tax rate even once.
• As a result, families and self-employed individuals who saw their incomes drop during the pandemic continue to face a heavy tax burden.

3. Increased Burden from the Invoice System for Businesses and Freelancers

The invoice system (Qualified Invoice System) was introduced in October 2023, significantly changing tax payment and accounting rules.

Key Points of the Invoice System

• Previously, businesses with annual sales under 10 million yen (tax-exempt businesses) did not have to pay consumption tax. With the new system, more businesses are now required to pay.
• If a business remains tax-exempt, its clients cannot claim input tax credits, increasing the risk of losing contracts or facing reduced payments.
• Freelancers and small businesses now face additional accounting work and tax burdens, leading to concerns about reduced income and even business closures.

4. Summary: How These Changes Affect Our Lives

• The 25% U.S. tariff could negatively impact Japanese businesses and employment.
• The 10% consumption tax remains unchanged despite the pandemic, adding to household financial pressure.
• The invoice system increases both tax and administrative burdens for small businesses and freelancers.

These policies and system changes directly impact our daily lives and work. Understanding why these burdens are increasing can help you make informed decisions about your future.

Glossary