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Industry At A Glance: Japanese Stimulus Worries Marketers

japenese yen rate beef exports
Japan’s move to jumpstart its economy with a $1.4-trillion stimulus could raise the potential for retaliation by its trading partners.

Monetary policy can often seem somewhat nebulous – both domestically and internationally. However, global trade has increased the importance of respective strategies – especially to those industries that are highly involved in international trade, of which beef is one.

The Bank of Japan (BoJ) has announced plans to rapidly engage a new, enormous government bond-buying program (~$1.4 trillion). Designed to lift the country’s inflation rate and boost its economy, the stimulus will ultimately serve to accelerate the weakening value of the yen and improve Japan’s position in the export markets. Most notably, it will comparatively weaken Japan’s currency, which will make products sourced from Japan less expensive. However, it also will make products coming from other countries into Japan more costly.

monthly u.s. dollar vs japenese yen

Following its initial BSE case in late 2003 that shut down all U.S. beef imports into Japan, the U.S. has worked hard to reestablish beef trade with Japan. In fact, last year’s U.S. beef exports to Japan surpassed $1 billion in value – nearly one-fifth of U.S. beef’s total exports in 2012.

The recovery during the past nine years has also been partially boosted by a relatively weak U.S. dollar. BoJ’s new stimulus may mean beef exports to Japan will perhaps slow over time.

Either way, last week’s BoJ quantitative easing program will likely possess some important implications. Most notably, there will be some fallout, with the possibility for trade retaliation given that the BoJ decision is in direct contrast to recent agreements among the G7 nations.

How might the decision influence international beef trade among Japan and its other trade partners such as Canada, Australia and the U.S.? How might the U.S. beef industry fare in all of this? Leave your thoughts in the comments section below.


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