Niinami’s comments come as the Japanese government engages the Trump administration in negotiations over its ramped up tariff campaign, with nations around to world watch how Japan fares.
The country is seeking to avoid a 24% across-the-board tariff as well as an exemption from the additional levies already in place.
Officials in Tokyo are hammering out a strategy for a second round of negotiations with the US, after its chief negotiator held initial talks in Washington last week.
Trump’s efforts to reshape international trade have led to wild swings in global markets and raised concerns the US economy could enter a recession.
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“Consumer confidence has been waning tremendously,” Niinami said. “Consumers nowadays are not spending willingly so they go to the economy instead of the premium products.”
If the trend continues, companies will focus on other parts of the world, like India and Indonesia, he said.
Niinami also serves as a senior economic adviser to Japan’s prime minister office and the chair of Japan Association of Corporate Executives, one of the biggest business lobbying groups.
US tariffs will also have a negative impact on Japan’s domestic economy, he warned, potentially reducing GDP by as much as 1% to 1.2%.
